From next week onwards we are stepping into a fresh new fiscal year. Give us a broad sense of clever moves and wider market movements that we are hoping for this sudden revision we saw in FY26 and the last quarter and FY25.
Christimathai: So, if we’ve seen the past few months, there are important sales that have happened in many pockets, and sales are very prominent in the wider market, and are also small and central in contrast to the Largecup, but we’ve also corrected them.
So, when you look at the portfolio at the moment, the benefits seen from each stock in the portfolio look much better than they were a few months ago.
And then there’s a few news flows. The main items are especially customs duties. This has impacted some of the sector, and looking at it is one of the major concerns around the world.
But if you think about it, India is in a way relatively insulated. There may be certain pockets, such as automobiles or pharmaceuticals, that may be affected. But India, one of the major issues taking place around the world, does not seem to be affected much in that sense.
So, with that in the background, looking at the ratings at the present time, especially when we look at the liquid pockets of the large cups we operate through our products, we can see that the ratings are almost fair in most sectors.
But I don’t say it’s true in the middle of big and small. Another point lies in the revenue trajectory. If you look at it, the last two quarters may be pretty bad in terms of revenue pickups and there may be some one-offs that have plagued the revenue for those particular quarters.
However, in stages, we expect a gradual pickup that may occur gradually. Now, revenues are not in a hurry, but there will be a step-by-step picks we look at. Therefore, looking at the combination of the Lagecup space, revenue growth and valuation, we can expect a reasonable return to progress in the Lagecup liquid portion of the bucket.
I want to understand what will be ahead in April. You gave us a broader perspective, but what will happen with other important triggers besides these April 2nd mutual tariffs, and therefore which sector are you staked?
Christimathai: So again, when you see each month adding to stocks individually, there is a long-term horizon. So, if you see the long-term trigger clearly, one of the big overweight for us is finance.
Of these, banks are a significant portion of our allocations, especially private banks. Now, some of the issues that have plagued the sector in the last two years, particularly in terms of regulation, certain other regulations that have suppressed increased risk, growth and also the normalization of credit costs we see, are some of the negatives that have been unfolding in the recent past, but are progressively not obsolete in the system, so they are not interfering, so they are not interfering. The effect of flowability RBI injection in the system appears to be in its shape as we progress through FY26.
Another aspect is, of course, in growth that has come back as it is decreasing across the system as it is polite to some of these regulatory headwinds.
The growth of the loan book across this will also rise as it progresses. And the most important point from the perspective of valuation, which most of these banks believe they trade at relatively reasonable valuations, is that they make us positive within the banking sector, so there are some asset quality concerns, but we look at it from the perspective of normalizing credit costs.
Other big overweight or allocations to us for us are within the IT service and it is in the midst of a bit of confusion. Looking at the past month and a half, the outlook is a bit degraded given some of the challenges we are seeing, but in the long run, given some of the pressure we have, it’s very difficult to apply what happens to discretionary spending. But looking over the long term, it’s just two years of service outsourcing single-digit growth, and that makes us positive.
I’m from February 28th to March 28th. It’s exactly a month after that. In this last month, Nifty saw a considerable recovery if he could call it after a correction he’d seen over the past few months. If you made changes in terms of your portfolio stance, have you ever booked a profit somewhere, what you entered, or have you used this dip as an opportunity to buy? Please let me know how you are positioned and if any changes you made to this portfolio you manage have changed at all.
Christimathai: So there is no reasonable advantage to a portfolio company as it really reflects what you see in a portfolio company in the past few months, somewhere in the portfolio cash position of the portfolio.
So our cash was around 16-17% somewhere in October, and is now gradually decreasing. It is located about 12% close to ABTS. There are market actions that can be moved up. For example, if the stock market did quite well this month, it could curb cash a bit.
However, widely, we have been assigned very aggressively in the market decline that occurred, and recently added to a specific IT name.
So I found some assignments in it. We also added some position within the consumption space, which concerns the delivery channels, the durable spaces that we believe are going on optimizations to hold the company properly.
So roughly, we were assigned quite a bit this fall. If there are more modifications, I’ll be happy to unfold more.
So when you talk about all of these sectors, you can choose your IT space and get an idea of where the value of the IT space is. The sector has also been a bit unsettled about Donald Trump’s policies, particularly with regard to the H1-B visa, and of course I’ve seen commentary from industry players that this will be a year of single digit growth.
Christimathai: So there are two things to call. Number one, of course, looking at the whole visa issue that was very obvious in President Trump’s first term, many Indian companies are increasing localization efforts and more in the first term itself.
So, looking at large IT services players, if US revenues look at the majority of delivery, when the site occurs to local talent, the risk is a little lower for us, ranging from 50% to 70% of its workers, depending on the company we choose.
But the more important question is what happens to discretionary requests. Especially when most majors do it in their final quarter commentary, what we’re looking at in terminology for the time being is that if US macros aren’t that useful, if expected, technology spending continues, so now appears to be in order.
So, again, it feels very difficult to predict, but it has been a long period of time that IT services spend. I’m talking about services that I’ve said were banks the biggest vertical for many IT services.
And for a very long time, we cannot see such calm growth. It was a post-covid, two years, two and a half years. Some of the benefits of covid were the large TCV victory during that period, some of which left. I think the issues lie behind us, such as most of these discretionary cancellations.
Therefore, most of the growth is driven by what we consider current costs.
So it might be very calm for another quarter or two. After that, things calm down. But we’re thinking of some of the names of largecap. Again, I think our taste in this pocket is heading towards the Largecup.
So, while FY26 growth may look a little lower on the bottom, it brings the fact of evaluation and looking at other sectors within other sectors, relative bets, IT services are still reasonably placed in the type of return ratio that works. So, not only is it a short term view, but it is also quite placed in IT services from a long term perspective.
