ICICI Prudential AMC’s latest filing noted a 30% rise in earnings for its manufacturing exposure, a lift that outstrips the sector average and signals a shift in investor sentiment.
Anand Shah, CIO of the firm’s PMS & AIF, said the manufacturing upside is tied to a 15‑20‑year slowdown in Chinese competition and a wave of protective duties that have nudged domestic margins higher. Metals, in particular, posted earnings growth of more than 30% over the past few quarters, a boost that the AMC attributes to a favourable rupee‑depreciation tailwind and dollar‑linked revenue streams.
The AI arena, however, remains a paradox. While capital outlays for infrastructure and chip manufacturing have exploded, revenue conversion lags, Shah warned. “We’re not seeing a boom in terms of revenue,” he told CNBC‑TV18, citing the pressure on both end‑user firms and supply‑chain players. This mismatch is challenging the broader narrative that a massive AI build‑out will eventually disrupt and wipe out several other industries.
Against this backdrop, the AMC’s portfolio strategy is evolving. IT services, which have been underweight for an extended period, are now gaining traction as businesses look to embed AI into their operations. Shah noted that IT firms have been cutting prices, passing on AI benefits to customers while maintaining top‑line momentum. The fund’s latest allocation reflects a modest tilt toward IT, with a view that implementation work could unlock new revenue streams.
Looking ahead, the AMC signals a cautious but optimistic stance. While the fund remains marginally underweight overall, it anticipates a gradual increase in IT weightage once confidence builds. In the manufacturing space, the focus will remain on sectors where earnings growth stays above 30%, such as metals and chemicals, while monitoring the evolving competitive landscape. The AI spending surge, though, will likely keep investors on alert for the next wave of valuation adjustments across the technology frontier.