Major defense projects – ships, submarines, missile systems – have a long gestation period. “Deliveries take time. You have to stay with the company for the entire cycle,” he notes.
Private players are preferred over PSUs
While PSU defense stocks have risen sharply over the past year, making valuations ‘challenging’, he prefers private names for new entry.
Top Picks:
Bharat forge: Rapidly scaling up its domestic defense activities
Larsen & Toubro: One of India’s largest defense contractors with diversified projects wins Smaller private companies, he warns, could face the same valuation risks as PSU leaders without the strong balance sheet.
IT sector: attractive valuations, but real challenges remain
IT stocks have undergone a meaningful correction from their highs, pushing valuations closer to the long-term average. But the fundamentals are still under pressure, Bandyopadhyay warns.
Why he remains cautious when it comes to large-cap IT
- US demand remains uncertain, despite first half indications and policy support.
- Order flows have not been revived.
- AI is changing the landscape – and Indian companies don’t have their own products.
- Margin pressure continues as companies rely heavily on third-party AI platforms.
He expects low single-digit growth for most major IT companies in the near term.
Where he sees opportunities in IT
Instead of broad IT exposure, Bandyopadhyay prefers niche players with strong domain strengths.
His preference is RateGain Technologies, which benefits from global strength in travel and tourism;
Coforge, a company focused on fast-growing industries and premium service areas
“Choose IT companies that serve segments showing strong global growth. Avoid generic IT service providers for the time being,” he advises.
The big picture: India is poised for broad-based growth
Across all sectors – autos, banks, capital goods – business commentary remains strongly bullish, Bandyopadhyay notes. But in the defense and IT sectors, investors need to be selective, valuation conscious and patient.
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