Tech Mahindra, Infosys, Wipro top picks among large cap IT stocks: Ajay Bodke

In a chat with ET Now, Ajay Bodke, Head-Investment Strategist & Advisory, Prabhudas Lilladher, shares his views on the defensive.

ET Now: What does one do in terms of the defensive play in the market especially with IT and pharma?

Ajay Bodke: In case of IT, we continue to like the front end IT stocks because the global economy is on an up move. US especially is chugging along at a very good pace and Europe has come out of its problems. So the main markets that contribute to the IT revenues are on the mend, pricing power is coming back in our interaction with the companies we are given to believe, margins should look up. The formative pressures that rupee was expected to exert when people are expecting it to appreciate all the way to 55, that pressure is clearly behind us.

So in our opinion, stocks like Tech Mahindra, Infosys and Wipro in large cap space and KPIT Cummins in the midcap space offer very good exposure. In particular, we are expecting a growth of around 43 per cent in earnings for KPIT Cummins for the current financial year followed by 22 per cent in next financial year. The company has a strong ROE of around 24 per cent and is trading at just 7.4 times FY16 earnings. Our analyst is estimating a one-year price target of around Rs 230 for KPIT Technologies.