Central and small-cap IT companies lead to AI innovation, LargeCap IT growth concerns: Nilesh Shah

“Except for fast commerce, TMs are clearly established everywhere, unit economics is established and you have many companies that are extremely profitable and dominated their related market segments,” says MD and CEO, Avision Capital Nilesh Shah.

The other thing you are supporting was the companies related to the platform, that’s the area you choose. Give us a little sense of what is happening and how you will look at the latest improvement in some of these stocks because despite the close -term concerns about their profitability, how do you pensure and consolidate the sector in any segment or rather increase your contact with or in any segment?
Nilesh Shah: Therefore, platform companies have now become a very widespread bouquet. There is essentially a food delivery platform and then there is a fast commerce space and then there are travel space, insurance, capital market plays, these are basically many companies that are in the digital platform.

Except for rapid commerce, TMs are clearly installed everywhere, unit economics is established and you have many companies that are extremely profitable and dominate their related market parts.

Therefore, clearly believes that apart from rapid commerce, where there is competitive intensity, we still choose the place because it is difficult to come to a business that may sustain the growth rate of 30% to 40% to the next four-five years or beyond, I think you are clearly not looking at all other businesses with very positive units and other businesses.

Therefore, clearly like the whole set of digital platform companies, they have fallen, yes, but that’s because they did very well in the last calendar year. 24, they did significantly well.

I mean if you are going to run, you may fall somewhere but the whole idea is going to fall again and again and this will happen to some of those digital platform companies.

When we were talking about the beginning of the year, you talked about how infrastructure, capex and cap goods are the themes that you think will continue to dominate for a long time. You still hold that scenario and in this recent correction, have you purchased or recommended in these names?
Nilesh Shah: Yes, we love this place very much. Clearly believes that the government wants to make more capacity of the cost and the construction of the government’s structure or basically the private sector.

There are also some other fields where you are looking at a large amount of greenfield projects in areas such as semiconductor or EMS players. Defense is where maybe a little less in terms of fresh orders but it is possible that maybe even by the end of this fiscal year or even at the beginning of the new financial year, you will see a great increase in terms of the order given by the defense side again.

Aerospace, Space Tech, these are some areas where we clearly believe that some companies are able to make their own position in terms of engineering capabilities and the ability to create components for both local OEM and global OEM.

Therefore, clearly, capex space, capex space now seems to be a great place to post this improvement 6 months ago or 12 months ago. Therefore, clearly like this space, it remains very creative on the space.

Also, help us to take on the railway and defense pack as financial consolidation, yes, that theme has been the theme of running them, but there is a bit of risk regarding execution and recent improvement, how do you see the whole space?
Nilesh Shah: Therefore, clearly, the challenge with Cape Goods Space or Infrastructure Space is that it is difficult to view these businesses on a quarter-on-quarter basis and that you could basically push the execution challenges or small delays in the next quarter or maybe a few quarters.

It is best to see these businesses from a two to three -year point of view that these businesses may be more attractive in the next three years, from the point of view of income, earning, and from the point of view of the balance sheet, and clearly that many of these stocks have now become more attractive with a three -year horizon instead of two to three quarters of Horizon.

I remember when we last talked at the beginning of the second year other than the budget, of course, how you were chatting about other than the midcap, choose that IT names will be the best compounding story. Is that point of view changed completely with such uncertainty about the Trump rule and does it now avoid?
Nilesh Shah: Still believes it is a neglect and it is because it says for the last decade that it has been growing in only one digit and it is really the challenge, though these are very strong rule, strong balance sheets, strong capital efficiency companies, because they are clearly on their size, top companies, and they are clearly on top services. Two, three types of companies where some of these companies are trying to focus on AI and Agentic AI and are able to make solutions to deliver AI to their enterprise customers and are able to provide solutions to their small size, small scale and AI, they are able to grow more pace.