Tech Mahindra along with peers like HCL, TCS, Infosys, Persistent have given magnificent returns since March 2020.
In the last five years, the company has given more than 200% returns. This is especially important as Pharma & IT were written off owing to issue linked to the US market in 2018.
So, having grown tremendously, since last few days companies like Infosys, TCS, Mphasis, Tech M, etc. have been correcting heavily.
Is there any reason for the same?
There are multiple reasons for the same
- Primary Reasons
- High attrition rate of employees
- Decrease in margins
- Increase in Manpower Compensation
- Growth Normalization
- Secondary Reasons
- Pressure on listed Software Companies in the US regarding sustaining growth exhibited in the past. This is important as many of these companies utilize Indian IT companies for outsourcing
- Monetary policy tightening by the US Federal Reserve that can lower the demand and spending by the US Software Companies
Considering this, and with the US Federal Reserve Policy decision for rate hike due in May 2022, I would prefer to sit on cash and wait for further correction prior to getting into the IT sector on a whole.
Hope this helps