No worthy buys

Krishnan Thiagarajan

EVEN though the MAIT-IMRB survey 2000-01 projected a 34 per cent rise in PC sales volumes to 1.9 million, in value terms the industry's outlook may remain depressed.

In 1999-2000, while the desktop PC market was up by 37 per cent in volume terms, in value terms, it rose only 13 per cent. Unless corporate and Government buying picks up, the scope for an increase in average unit realisation remains bleak. As the greatest scope for value addition is possible only in the corporate segment, that will remain linked to the recovery of the economy from the current slowdown. Till that happens, the home PC and SOHO markets will be the mainstay for the entire hardware industry, starting from the assemblers/GIDs, domestic manufacturers and the MNCs.

Moreover, some sceptics are ringing alarm bells over the creation of a wave of information appliances set to rule the world, hitherto the PCs segment's stranglehold. Most of the Internet-linked applications using these information appliances, such as PDAs (personal digital assistants), cellular phones, thin clients, Palmtops and Net TV may continue to be hype for another year or two in India. Hence, the fears on this score are unwarranted at this point in time.

Against this backdrop, in the computer hardware industry, among pure PC and peripheral players, the only stock worthy of investment is HCL Infosystems. Building on its strong presence in computer hardware (with two plants at Noida and Pondicherry), it has taken steps to rapidly evolve into an end-to-end IT solutions provider, emerge as a IT consulting architect in the field of e-commerce and expand its foray into the ISP space through a subsidiary. The stock has been battered closer to its 52-week low in line with the overall market trends. Considering the stiff competition from MNC majors, low margins in hardware business and the relatively early stages in its e-commerce foray, existing investors can stay invested, but fresh investments may be contemplated only at declines. The stock is currently trading at Rs 231. In the light of the aggressive moves from MNCs in the PC market and the continued slowdown in corporate spending, the other listed stocks namely, Zenith Computers, Vintron Informatics, Computech International and PCS Industries may be ignored in the near-term.