IT stocks to buy: Brokerage firm HDFC Securities has recommended IT stocks by assigning ‘buy’ rating with up to 34% upside ahead of the beginning of second quarter earnings season (Q2 results FY27).
The brokerage’s recommendations point to a mixed but potentially attractive setup across Indian IT stocks, with TCS carrying a target price of ₹2,470, implying 20% upside, while HCL Technologies has a target of ₹1,370, indicating 11% upside.
According to the firm, Wipro could rise 17% to ₹185, while Tech Mahindra has a target of ₹1,660, suggesting 9% upside.
Among the mid-cap names, Persistent Systems has a target of ₹6,070, implying 15% upside, while Mphasis stands out with a target of ₹2,840, offering 32% potential upside.
The brokerage also sees significant upside in select engineering and smaller IT companies. L&T Technology Services (LTTS) has a target of ₹3,570, implying 11% upside, while Tata Elxsi has a target of ₹3,900, offering 26% potential upside. Zen Technologies and Birlasoft are among the highest-upside picks in the list, with target prices of ₹565 and ₹365, respectively, implying 34% upside for each.
| Company name | Target Price (in ₹) | Upside |
|---|---|---|
| Tata Consultancy Services (TCS) | 2,470 | 20% |
| HCL Technologies | 1,370 | 11% |
| Wipro | 185 | 17% |
| Tech Mahindra | 1,660 | 9% |
| Persistent Systems | 6,070 | 15% |
| Mphasis | 2,840 | 32% |
| L&T Technology Services | 3,570 | 11% |
| Tata Elxsi | 3,900 | 26% |
| Zen Technologies | 565 | 34% |
| Birlasoft | 365 | 34% |
| Happiest Minds | 360 | 16% |
IT sector Q2 results FY27 preview
HDFC Securities, in its report, said that the impact of currency movements is expected to be relatively small this quarter, at around 10–20 basis points (bps) on average. Among the top IT companies, dollar revenue growth is expected to range from a 0.5% decline to a 1.8% rise quarter-on-quarter (QoQ), while year-on-year (YoY) growth could range from a 0.1% decline to a 5.4% increase.
Among the large IT companies, HCLTech and Tech Mahindra are expected to perform the best. HCLTech is estimated to report around 2% QoQ growth in constant currency (CC), along with an improvement of about 50 bps in operating margins. Tech Mahindra is expected to post 0.9% QoQ growth in CC terms, translating into the strongest YoY growth of around 5.3%, along with a nearly 190 bps improvement in margins.
TCS and Infosys are expected to report growth of around 0.5% and 1.3% QoQ, respectively, which is considered weaker than what is normally expected in a seasonally strong quarter. Wipro is expected to see a 0.4% QoQ decline.
Among mid-sized IT companies, the brokerage firm anticipated that growth is expected to be stronger, ranging from 0.6% to 6.3% QoQ in constant-currency terms. Persistent Systems is expected to lead with 6.3% growth, partly helped by its Concise Systems acquisition. Cyient DLM? is expected to grow around 5.5%, helped by the consolidation of Tao Digital for one month. LTIMindtree (LTM) could grow 5.3%, supported by the consolidation of Randstad IT for about a month, although its organic growth is estimated at only around 0.6%.
Mphasis is expected to grow around 3.5%, supported by continued growth in its banking, financial services and insurance (BFSI) business. Zen Technologies and Happiest Minds are expected to grow around 2.4% and 2.3%, respectively.
LT Technology Services (LTTS) is expected to grow around 2.1%, while Mastek and Tanla Platforms (TELX) are expected to report around 1.7% growth each. At the lower end, Birlasoft is expected to grow around 1%, while Sonata Software may grow just 0.6%, making them the key laggards among mid-tier IT companies.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
