When Accenture slumped nearly 18% in a single session, it sent shockwaves through Indian IT. Infosys, Wipro, and Cognizant all took sharp hits. But according to Sandip Sabharwal of asksandipsabharwal.com, investors looking for a buying opportunity in large-cap IT may be asking the wrong question entirely.
"Indian IT companies are no longer long-term investment companies as of now," Sabharwal told ET Now. "They just look like trading plays -when they get heavily oversold, you can buy them and hope to make 12% to 15% returns."
What Accenture is really saying
The read-through from Accenture's numbers isn't primarily about AI displacement, Sabharwal argues. It's about a softening macro outlook. Accenture revised its growth expectations down because its clients are pulling back, not because AI has automated away the work.
That said, he doesn't dismiss the AI risk entirely. The pace of new model releases, he notes, means disruption will only deepen going forward. The bottom line: whether you frame it as a demand problem or a technology threat, Indian IT faces headwinds on both fronts.
For now, most of these concerns are already baked into large-cap stock prices. The bigger danger may actually sit elsewhere, in midcap IT names that have guided for aggressive growth and now face a reality check.
Bata finally changes the guard, but don't buy the hype yet
Away from IT, Bata India grabbed attention this week with a management shake-up. Sabharwal sees genuine potential in the brand, but tempers expectations sharply.
The company has significant resonance with India's middle class, he notes, but has repeatedly failed to convert that brand strength into results. Successive management teams have promised aggressive turnarounds on conference calls. None have delivered. The culprits: a weak retail strategy, poor product positioning, and an inability to compete with the new wave of D2C footwear brands.
"The change was much required," Sabharwal said. "The CEO matters in many companies."
The encouraging backdrop is that early signs of a consumer demand recovery are already visible. If the new leadership can move quickly enough to capitalise, a stock trading at multi-year lows has meaningful upside. But execution, not announcement, is what will matter.
EMS sector: Great story, terrible price
Electronic Manufacturing Services (EMS) has been the market's favourite structural theme, with Dixon and Amber among the most talked-about names. Amber's newly announced tie-up with Oppo to manufacture phones in India adds another growth layer to an already buzzing sector.
Sabharwal is unmoved. His view on valuations is blunt: EMS companies operate in a low-margin, low-value-addition business, and current price-to-earnings multiples are simply unjustifiable. He estimates the sector deserves valuations no more than 25–30% of where stocks currently trade. Until that correction happens, he's staying out entirely.
Where the opportunity actually is
So where does Sabharwal see value right now? Autos.
The sector has underperformed despite falling crude oil prices and easing commodity costs, both of which directly improve margins. On-ground demand remains resilient even amid monsoon uncertainty. Auto ancillaries offer a similar setup. For investors looking for medium-to-long-term ideas at reasonable valuations, this is where Sabharwal is directing attention.
On Nykaa, he struck a cautiously positive note, strong growth in the beauty vertical, improving profitability trends, and a credible strategy. Valuations look stretched after the recent run-up, but he flags it as a stock worth watching on dips.
