On the IT sector, Mehta in an interview to ET Now noted, “It is one of selectivity and we have seen the results so far which have come through from TCS and HCL Tech and even Tech Mahindra and you have seen the result which has come from Persistent Systems. So, there are like for every 10 IT companies which are in flat or stagnant mode there are perhaps one company which is outlier which is an outperformer and certainly Persistent Systems is one of them. It reflects in the valuation as well. TCS at 21 times, Persistent at 50 times. So, one has to be extremely selective when it comes to software companies.”
He added that unless IT companies have specific strengths in verticals or client segments, mid-single-digit growth is likely, limiting investment-grade opportunities. Mehta highlighted Persistent Systems and other new-generation companies like Newgen and Aurionpro as strong performers compared to traditional IT names.
Discussing LG Electronics’ recent product launch and IPO listing, Mehta said, “No, I think that given that there is lot of momentum behind, consumer sales and LG being the largest consumer appliance company, it should trade at premium valuations and even at these levels it is at a discount to some of the other companies like say Voltas or even a Blue Star. So, very positive on LG Electronics and the GST cut certainly will benefit them and that will be reflected in the September and December quarter numbers as well.” He added that the stock may see further momentum in the coming trading sessions.
On insurance companies, Mehta maintained a neutral stance. “First of all, they are a complicated business to first of all track and difficult to understand and connect all the dots like ICICI Lombard if you see the management commentary, the combined ratio is higher. They have grown less than the industry averages and yet the net profit is up. So obviously there is something which is happening on the on their portfolio investments which has resulted in higher net profit.” He noted that insurance is a highly regulated sector with limited scope for innovation and suggested that fintech or financial services companies may offer better investment potential.
Finally, Mehta expressed optimism about the healthcare diagnostics sector. “After many quarters, last two-three quarters all the diagnostic companies have reported very good numbers. Metropolis, Dr Lal now we have seen Thyrocare as well. First of all, it is a bit of a cycle. Secondly, consolidation certainly has helped the industry and end of the day healthcare spends are on a secular upswing and especially doing various types of tests have become the absolute norm and also these diagnostic companies they are expanding deeper and deeper into tier II, tier III and also lot of acquisitions have been done by these companies over the last few years or so which are paying off. So, very positive on the entire sector. I would say that the diagnostic companies have a better scope to scale up than some of the hospitals which is a capital intensive business. So, within the healthcare industry and that investment theme diagnostics certainly one should be overweight on.” Mehta’s views reflect a cautious yet opportunistic approach to investing in select sectors, emphasizing quality, growth potential, and structural advantages over broad-based sector bets.
