For Indian IT Firms, Trumps Push For Obamacare Overhaul Presents Big Opportunities: UR Bhat

US President Donald Trump in his address to the Congress reiterated his promise to overhaul Obamacare, a signature policy of former President Barack Obama to improve access to health insurance for US citizens. If Obamacare is overhauled, it could present big opportunities for Indian IT companies, says UR Bhat, MD of Dalton Capital. Mr Trump called on the Congress to repeal and replace Obamacare. He said reforms should lower the cost of healthcare and ensure people with pre-existing conditions have access to coverage. Mr Trump also proposed tax credits and expanded health savings accounts for people to purchase health insurance. Legal reforms should also protect patients and doctors from unnecessary costs that drive up the price of insurance, said Mr Trump.

The Obamacare law, which extended health insurance to 20 million Americans, has been popular in many states but it has also been criticised for its steep premium increases.

Speaking to NDTV Profit, Mr Bhat of Dalton Capital, said, "Indian IT companies are reasonably well exposed to US markets. One has to watch, for example, how new healthcare sort of business in US would offer opportunities for IT companies."

Mr Bhat said that "Obamacare has been one of the highlights of IT companies sales in the US for the last couple of years. If they are going to revamp the whole thing, probably there are opportunities for the IT companies also. One needs to watch this space closely."

The US accounts for 60 per cent of export market for Indian IT sector.  Concerns over protectionism and tightening of H1-B visa regime have weighed on the performance of Indian IT stocks. Besides that the Indian IT companies are grappling with lower growth amid huge changes in technological landscape. 

Mr Bhat said the earnings of Indian IT companies will also get a boost from a strengthening dollar. "Dollar has been somewhat weak for some time. Eventually with the interest rate hike, the dollar would do well," he said. A string of better-than-expected economic data including evidence that inflation, that has remained below a US Federal Reserve's target since 2008, was rising to a 2-per cent target has raised expectations both inside and outside the Fed for rate hikes this year. The US central bank has hiked rates only once in each of the last two years.

Mr Bhat currently has a neutral view on Indian IT stocks. He also sees valuation of IT stocks reasonable currently.  Speaking about the Rs 16,000 crore share buyback programme of TCS, Mr Bhat said "others would probably follow unless they find great use for the cash which does not seem anywhere in the horizon as of now." (With agency inputs)