Infosys, TCS and HCL Tech remain top picks of brokerage firm Kotak Institutional Equities followed by Cyient in the mid-tier segment amid an extended outlook for weak demand and macro uncertainty in the IT sector.
, and remain of brokerage firm followed by in the mid-tier segment amid an extended outlook for weak demand and macro uncertainty in the IT sector.“Recovery hopes have been pushed back to FY2026. Stock price corrections in the past few months have made valuations more palatable. Infosys is our top pick followed by and HCLT. We like among mid-tier. Further correction can make other mid-tier interesting,” stated the report.
Here’s a summary of the for the above-mentioned stocks:
Infosys
The target price for the stock has been set at Rs 1,750, with a ‘buy’ rating. This indicates an upside potential of 22.7%.TCS
KIE recommends a target price of Rs 4,300, signaling a 9.7% upside from the current market price of Rs 3,992.HCL Technologies
HCL’s target price has been fixed 17.7% higher at Rs 1,600.Cyient
The target price for Cyient is placed at Rs 2,275, 28% higher than the current price.The brokerage views that Infosys has a reasonable growth visibility in FY2025 aided by large deal wins in the past few quarters and will stand to benefit disproportionately compared to Tier-1 peers when discretionary spending picks up. Stocks such as and have come off from highs but still trade at expensive valuations.
Mid-tier grew at an aggregate of 3.5% year-on-year (YoY) compared to 0.1% YoY growth of Tier-1. The difference in growth rates has reduced significantly in the past several quarters although mid-tier continues to outpace Tier-1 on growth.
“IT companies outlook leads to a reset of both growth and margin expectations for FY2025. guidance for FY2025 missed expectations for all companies. Modest guidance was driven by a weak discretionary spending environment, continuation of ramp-downs in existing engagements although at a lower pace and slower conversion of pipeline to TCV and revenue. Companies do not expect any improvement in FY2025,” Kotak further added.
IT firms indicated working on several gen AI PoCs for clients but have not provided any break-up of revenue from generative AI, unlike . At the current stage of adoption, it appears that the revenue from generative AI projects is not significant for Indian IT. Scaled-up programs and foundation work required for AI such as the development of appropriate cloud and data infrastructure can drive revenues in case the adoption increases among clients.
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Source: Stocks-Markets-Economic Times