In an interview to CNBC-TV18, Sagar Rastogi of Ambit Capital shares his views on the Cognizant- Trizetto Corporation deal worth USD 2.7 billion and the scope of acquisitions in the IT space.
Below is the transcript of Sagar Rastogi's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Latha: We have not seen the IT stocks do much but do you think now they will be under pressure to match Cognizant’s buy?
A: This deal provides a peek into long-term future for IT services. Globally, IT spend is trending towards business platform as a service software. So, instead of people spending separately on hardware, software and people to integrate and run the system, the time of for a complete package.
I would see this more as a long-term play, this is where the industry will be five-ten years from now, I do not think the Indian IT guys have to patch up to this in a year or six months but we will expect more such acquisitions in future and people like Tata Consultancy Services (TCS), Infosys with large amounts of cash, will be looking out for such deals.
Sonia: Among Infosys, TCS and Wipro that have high cash, where do you see the highest scope of cash utilisation for in organic acquisition soon?
A: I think Infosys has so far been the least acquisitive among all of them – that might change with the new CEO coming in. We will have to wait till October 10 when he will spell out his philosophy.
Wipro has been doing small acquisitions so far. I do not see that changing too quickly.
TCS on the other hand has shown in the past an ability to take big bets. It acquired Diligenta many years ago, a similar platform, BPO kind of operation which it has ramped up successfully. It also wrote a cheque for USD 500 billion plus for Citi’s BPO operation. So, TCS among the three will be best positioned.
Sonia: What are your top picks in the sector?
A: I like TCS and HCL Technologies.
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