I heard that management commentary is coming from Infosys. Overall, the commentary on this sector was a bit cautious. What is the whole pulse that catches this sector?
Sandip Agarwal: I have operated a technology company and now I have been tracking technology for almost 20 years. Therefore, 80-90%of spending from customers in technology is actually a top priority expenditure. In other words, it is not dangerous because it is a very sticky pension business because it is not negotiated because it is a everyday system and pension maintenance.
Even in Reman crisis, the profit always existed. Cannot be changed. It was also there in Kobid. Therefore, in the worst scenario, 80% of the total revenue is very sticky, so sales can be reduced by 5-6%.
The problem is that 20%of balance is the last priority. Thus, you have prioritized 80%of the business that can be a top priority, and 20%of such businesses.
Whenever there is a little uncertainty, 20%of this is smoke, delay, and cancellation, so now there is always a challenge for 20%, and everything occurs at 20%. So, my opinion is that the index has done very well in the last eight months. It has actually increased, and now it is a problem because the evaluation is impossible and the change of presidential position is a great business for us.
Therefore, the cost always increases. In 2014, we have seen the increase in localization when we have increased 5-6% of the margins of this sector over the last decade.
So challenge is this. Therefore, this time, if a tariff occurs, I know that there is a problem with the country. There are negotiations and some solutions, but we cannot grow until there is uncertainty when 90%of business is uncertain about global growth outside India. So it is our challenge. It is a very different kind of sector where some parts are fixed forever and the very small parts are unsatisfactory and always have difficulty in uncertain times.
In fact, there have been weaknesses over the last few months, because of inflation problems. There was also concern about the increase in interest rates. But how can it be given that there is a concern about the recession now?
Sandip Agarwal: Therefore, there are two things. If there is a recession, we knew that entering the recession in the past faced all economies around the world. The effect can be achieved by the delay effect.
And as I mentioned above, other IT companies may have different kinds of exposure to the United States. Someone has 40, 60 someone, and 50, but 25-30%of the balance from Europe and other development markets comes from our branch or subsidiary. Therefore, the entire export is basically related directly with us. Therefore, if there is a economic downturn and the definition is in the recession.
Therefore, if it is a mild and soft landing type recession, imports will be secured, you can withdraw up to 2-3%and grow to a maximum of 2-3%. I think it’s a situation today.
If you have a very difficult landing, as you have seen in Covid or Post Lehman Crisis, if you have a one-second-two-four-four-four-four-fourth, perhaps 5-7-10%, you lived short because of the first part of your profits and the first time.
Therefore, it is more than 100%of revenue that does not come. Therefore, all things did last year were somewhat secured, but if you are on the environment at least not good, you should be stable.
If so, what is the prediction of 2025-26 compared to last year?
Sandip Agarwal: So this year will be a hard year. I will not grow more than 3-4% in the industry, and as there are more exposure in Korea and the Middle East, such as WIPRO, we will inherently inform our IT industry, except when we leave some of our exposed companies.
Therefore, if you leave it to the side, we are the first half of the country. Most companies achieve most growth in the first half. Because one quarter is a Christmas vacation and a quota quota, there are few days in February even if it takes 2-2.5%of profits in February 2 in February.
So we are the first half -centered company and we are in our current situation. I think the first half of this year is gone. If the first half of this year disappears, it can grow more than 2-3% in the second half of the year.
It will also be a difficult task. So I think that’s getting out of the current situation. It will be very difficult to show higher growth than this year. Everyone will be a miracle. Even if it happens, it will be like the growth of a low single seat.
If so, is there a lining in all of this or is it a very wide foundation?
Sandip Agarwal: I think the stagnation is wide, but today’s situation is in today’s situation. The worst hit is that the most uncertainty is in the manufacturing space and seeing serious challenges, especially what we hear, is that ERP is in a dull mode right now.
There is no demand in that space. Again, it is mainly related to the manufacturing side.
Among the things you manufacture in all these segments, you say that it will be the worst, but how do you see the company maneuvering with this challenge? What is the current idea that you are listening to from the company, for example, do you see more in the IT industry, for example, more transaction suspension, what will you see on the transaction front on the decision -making front?
Sandip Agarwal: So now, my greatest fear will see the cancellation and large scale of the next one or two months, and because of the cancellation of transactions, it will completely stop the transaction of the discretion, and when this kind of situation happens, when we take for several months, we for two months, we for two months, we for two months, we for two months, we for two months, It took a few months.
Now this cancellation of this transaction may be a small transaction of $ 100 million, not about our export size and profit size, but the problem is that we start to wait for six months before we award our deal.
So, as I said, acting, delay and cancellation is a very bad result in this kind of situation I fear. Travel will be much smoother if there is no cancellation of transactions in the next 3-4 months.
