Conrad Saldanha, Managing Director and Portfolio Manager at Neuberger Berman, warned that Indian IT services companies could be "net losers" due to accelerating global automation and must "disrupt themselves" to remain relevant.

Key Risks to Indian IT

Saldanha noted that the rise of artificial intelligence (AI) is already disrupting traditional IT billing models. Coding tasks that once took weeks can now be completed in days, creating a "risk factor on your billing" for firms built on time-and-material contracts. He cautioned that traditional IT services face weak growth and flat margins, keeping him cautious on the sector.

Views on Platform Companies and AI Trade

He observed that valuations for India’s consumer tech and platform companies are being driven partly by the scarcity of pure-play AI firms, with investors "chasing growth wherever they can find it." However, he warned that some companies in this space "can get disrupted" as AI reshapes the industry.

Globally, Saldanha does not see a major reversal in the AI trend, stating, "This is here to stay." He noted that leaders like Nvidia and Broadcom are "cash-generating machines," though investors should remain mindful of valuations.

Investment Preferences in India

Saldanha prefers a bottom-up approach and highlighted several long-term opportunities:

• Infrastructure & Healthcare: He remains positive on power equipment (Voltamp, CG Power) and healthcare (Apollo Hospitals), citing structural demand.
• Banking: Large banks like HDFC Bank, ICICI Bank, Kotak Mahindra Bank, and SBI are becoming more attractive as concerns over loan growth and asset quality ease, offering valuation support.
• Technology: He favors hardware and niche digital companies over traditional IT services, naming Netweb Technologies and Aurionpro Solutions as holdings.
• Electronics Manufacturing: Companies like Dixon Technologies, Kaynes Technology, and Amber Enterprises continue to scale, with valuations still attractive on a 3–5 year view.

Outlook for India

Saldaha believes India could become a "contra trade" for foreign investors as domestic growth stabilizes and global alternatives become expensive. The recent outperformance of Indian equities against the NASDAQ reflects this trend. "I think the setup is looking good for India," he said, noting that the valuation premium has narrowed and earnings may improve into the next year.