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The 2014 All-Asia Research Team: Technology/IT Services & Software, No. 2: Mitali Ghosh & team
The Bank of America Merrill Lynch duo steered by Mitali Ghosh earns the No. 2 slot for a third consecutive year. Ghosh, who works out of Mumbai, reports that the pair is bullish on the information technology services segment, given a likely macro-led cyclical uptick in spending in the U.S., the largest market. The analysts are also encouraged by three structural revenue drivers: market share gains in IT infrastructure outsourcing; growing penetration of service offerings into Continental Europe; and a new technology wave driven by the digital trends of social media, mobility, big data analytics and the cloud. However, they caution that margins are at risk if the rupee appreciates steeply and that possible immigration-related reforms could limit visa availability for onsite service in the U.S. and other places. As last year, Ghosh and her teammate recommend that investors favor Indias Tata Consultancy Services and Tech Mahindra. Tata has the potential for a revenue-led earnings surprise, she notes, driven by strong competitive positioning in several large and underpenetrated markets and in initiatives like the cloud that are benefiting from the new wave of tech spending. Tech Mahindra, they advise, could command a higher price-earnings multiple than current levels because it possesses revenue traction in such verticals as manufacturing as well as in telecommunications. This team has a deep understanding of the sector, insists one backer.