NewsStocksMid and Small-Cap Stocks Show Stability Signs as Infosys Outlook Improves: Sameeksha CapitalMid and Small-Cap Stocks Show Stability Signs as Infosys Outlook Improves: Sameeksha Capital
Sameeksha Capital's Bhavin Shah reports early stability signs in mid and small-cap stocks, with improving outlook for IT companies like Infosys. Recent TCS and Infosys results exceeded expectations, with Infosys offering 4.00%-4.50% free cash flow yield and 10.00%-12.00% total return potential. AI projects transitioning to implementation by 2026 could benefit IT sector, while companies like InterGlobe Aviation, Nuvama Wealth Management, and NephroPlus present opportunities across sectors.
*this image is generated using AI for illustrative purposes only.
Mid-cap and small-cap stocks are displaying early signs of stability, with notable improvements in the outlook for Indian IT companies, particularly Infosys, according to Bhavin A Shah, Founder, CIO, and CEO of Sameeksha Capital, which manages funds worth over ₹1,200.00 crore. The fund manager's assessment comes amid a broader market environment where selective opportunities are emerging across various sectors.
IT Sector Shows Promise with Strong Results
Recent quarterly results from major IT companies have exceeded market expectations, providing a foundation for optimism in the sector. Shah highlighted that results from Tata Consultancy Services and Infosys were better than anticipated, with the second half of the year looking relatively stronger for Infosys specifically.
| Investment Metrics: | Infosys Details |
|---|---|
| Free Cash Flow Yield: | 4.00% to 4.50% |
| Potential Growth: | 7.00% to 8.00% |
| Total Return Potential: | 10.00% to 12.00% |
Shah noted that Infosys stock continues to offer attractive valuations with a free cash flow yield of about 4.00% to 4.50%, combined with potential growth of around 7.00% to 8.00%. This combination could translate into total returns of approximately 10.00% to 12.00% for long-term investors.
AI Implementation Timeline Creates New Opportunities
The artificial intelligence landscape is evolving significantly, with industry discussions suggesting that AI projects are moving from pilot stages to real implementation in calendar year 2026. This transition could create substantial new opportunities for IT companies, even as automation may reduce demand for manpower in certain areas. Shah emphasized that the AI momentum is being driven more by actual industry demand rather than company promotional statements.
Following sharp movements after results announcements, IT stocks may trade sideways for some time but remain suitable for long-term portfolios. The fund manager referenced Charlie Munger's philosophy, stating that consistency often matters more than brilliance in the long-term nature of IT services businesses.
Market Opportunities Beyond IT Sector
Several companies across different sectors have caught the attention of Sameeksha Capital for their strategic positioning and business fundamentals:
| Company Focus Areas: | Key Strengths |
|---|---|
| InterGlobe Aviation: | Strong market position, wet leasing strategy |
| Nuvama Wealth Management: | Wealth management and capital markets presence |
| NephroPlus: | Focused dialysis business model, experienced management |
InterGlobe Aviation stands out for its market position and strategic steps such as wet leasing to manage capacity effectively. Nuvama Wealth Management offers exposure to the growing wealth management and capital markets space. NephroPlus, a recent listing in the dialysis segment, presents a focused business model backed by experienced management.
Earnings Season Critical for Market Direction
Shah emphasized that earnings growth in the coming quarters will be crucial for market performance. He noted that some stocks have not reflected their underlying business performance in share prices due to selling pressure, creating additional opportunities in the current market environment. The success of the current earnings season could significantly influence market trajectory going forward.
20
