IT companies: Medium to long term, IT cos in a good time: Sudip Bandyopadhyay

“We shouldn’t paint all new-era tech companies with the same paintbrush. We need to start distinguishing between companies, their performance and their potential,” says Sudip Bandyopadhyay“, chairman of the group, Inditrade Capital.

What do you expect in terms of ARPU, in terms of overall subscriber additions, management feedback and number of titles from Bharti?
I think Bharti’s numbers are going to be good. Let’s put it this way. On a consolidated basis, Africa is doing very well. Airtel Africa has now been included in the FTSE index and that was big news and the African business has finally recovered and that’s the icing on the cake. Regarding India, we know that ARPUs have started to increase. All the companies have actually raised their prices and that bodes well for the industry because that hasn’t happened in a very long time and now it has finally started. We therefore expect a good quarter.

Of course, the full impact of the rise they have taken will be visible in the next quarter, that is to say in the fourth quarter, but at least the beginning will be there. Also remember that the government has announced that the 5G auction will take place in the next fiscal year itself. Somehow we’ll have to see how Bharti prepares for this because obviously they’ll have to bid and they’ll have to bid aggressively to have their presence in 5G.

When it comes to subscriber additions, the monthly numbers are coming out and we know the numbers have been pretty good. They have been far better than any other peer and it has been a commendable effort considering what Jio has done and how aggressively Jio has moved in the market. But Bharti’s number addition has been remarkable. They probably won at the expense of Voda-Idea. Given all of this, earnings will be good, but valuations also look pretty comprehensive at this level. Unless there is an instinctual beating of expectations, there won’t be too much upside movement at this point.

What do you think of some recent heavy tech IPOs? There’s been something of a rout when it comes to Meta and it’s seen the whole of the tech-heavy Nasdaq take a bit of a hit. But the situation is quite the opposite in the case of Amazon. Should companies be examined on an individual basis rather than being lumped together?
Absolutely, in fact, I’ve been an advocate for that. You can’t paint everyone in the same brush. Even to take your example of what happened to Facebook’s parent company and what kind of market capitalization it lost, look at what happened to Google. I think their results have been good and they’ve done well and they’ve done well in the market. So yes, the Nasdaq corrected due to the heavy bloodshed we saw on Meta, but on the other hand Google’s parent company won and Google’s parent company is doing well. Amazon is doing well. So it’s not the same thing. We need to start distinguishing between companies, their performance and their potential.

The same pretty much applies to recent Indian tech IPOs. One cannot compare Paytm with Policybazaar and some of the other companies that have come up with IPOs. We need to see a company’s profitability, activity and potential and assign some sort of valuation to that. We have seen significant corrections from these new IPOs, even in the Indian market, and investors are likely returning to the tried and tested metric of valuation based on earnings and sales and realistic multiples.

Indian IT companies, both large and midcap, are to some extent homogeneous. They all have solid demand as things stand. So I wouldn’t want to compare them with Meta or Alphabet or Amazon. They are in a different league. But having said that, Indian companies in their own space are doing well. There is solid demand. Management has been extremely positive for almost all IT companies and we believe that in the medium to long term, Indian IT companies are going to have a good time.


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