Growth outlook of IT, Auto and Metal industry in India

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IT sector to show remarkable growth in the next two years.

The IT sector is highly valued and is expensive but, the growth investors are relishing this sector. IT sector has turned out to be the best outperforming sector after the onset of the pandemic.

They are touching new highs, giving breakouts and the PE multiples are also at their all-time high.

The small-cap, mid-cap and large-cap IT stocks are fully priced and have reached their peaks. But the outlook is fantastic because of the environment we all are prevailing in.

The pandemic has taught the world that software programs can be made anywhere in the world, which has brought unprecedented growth in the IT and software industry in India.

There is accelerated growth in the IT segment, which is likely to continue in the short term, but eventually, it will slow down its pace in the medium term. The valuations will also conclude.

The Indian IT companies have taken the disastrous pandemic as an opportunity and have leveraged it in a magnificent way to reap the benefits of digitalization. They have exploited every opportunity and made use of Work from home (WFH). Also, the concerns revolving around automation and coding have been solved.

The time to buy metals is over.

The metal sector has performed well. ICICI Prudential has a fair percentage of exposure in this sector, but they are waiting for the right time to offload their stakes. But the right time to sell or trim their stakes from this sector is still unclear.

Most people have missed the sector because of their perspectives that vehicles cannot be manufactured without metals.

Presently the metal segment is booming because of climate changes and various other things like improving demand, healthy exports, rising prices of coal across the globe.  

The near-term outlook is strong, but the ESG compliances can have an impact on production. Experts suggest making cautious investments in this sector.

Auto sector- The EV sector is attractive.

Auto is an interesting sector to invest. IT salaries are rising, there is cutthroat competition and high attrition. The people are being provided with salaries which are higher than ever before. It helps people to buy better automobiles. Also, personal mobility is augmenting, and the demand is rising due to the upcoming festive season.

Empirical data suggests that auto experiences cyclical rally, especially the two-wheeler segment.

The sector has also faced several issues like inflation in raw material prices, semiconductor shortage and supply chain constraints.

The EV disruption will bring new products into the market, and the sector will get significantly rerated.

The valuations are attractive as compared to the last five years. The sector looks promising as the government has provided a lot of support by launching a PLI scheme for this sector.

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