Speaking to ET Now, Choksey said last week’s strong rally in IT stocks reflects deeper structural changes underway rather than short-term sentiment.
Large IT cos shift from asset-light to asset-heavy: A new era begins
The biggest shift, according to Choksey, is the transition of large IT companies like TCS and Infosys from purely asset-light outsourcing models to building asset-heavy, capex-driven platforms, including data centres and AI development ecosystems.
He called this a “new era” for Indian IT as companies:
- Build AI-backed application development platforms
- Invest in product and platform-led businesses
- Deploy their large cash reserves into long-term capex, rather than frequent buybacks.
This, he says, sets the stage for rerating, especially once US tariff clarity emerges.
15–20% upside possible as sector re-rates
With strong balance sheets, cash reserves and evolving business models, large IT firms may see 15–20% upside from current levels, Choksey noted.
“The worst seems behind them… and a rerating is distinctly possible,” he added.
Largecaps to outperform first; mid-tier to follow
On whether to prefer large-cap or mid-cap IT, Choksey said a selective blend works best—but large caps currently hold an edge.
Largecaps:
- More reasonably valued
- Underperformed earlier, leaving room for a rebound
- Backed by infrastructure-led growth strategies
Mid-tier IT:
- Agile and solution-based
- But more expensive on valuations
- May take longer to participate in the upcycle
“In the near term, larger companies may give better returns… mid-tier names will participate but with a lag,” he said.