Coforge, Mphasis, Hexaware, TechM, LTM, Infosys, TCS among Nuvama's top IT stock picks
Nuvama is positive on IT stocks. It prefers Coforge Ltd, Mphasis Ltd, Hexaware, Firstsource, Tech Mahindra (TechM), LTM Ltd, Infosys Ltd and Tata Consultancy Services Ltd (TCS).
- Jul 3, 2026,
- Updated Jul 3, 2026 10:07 AM IST
Nuvama Institutional Equities in a fresh note said the IT services model is here to stay and the Generative AI disruption would only lead to bigger opportunities for domestic IT majors. Post the recent sharp correction, it finds valuations of all IT stocks under its coverage highly attractive. The domestic brokerage said following a sharp underperformance over the last six months, primarily due to a negative narrative built by Gen AI platform companies, compounded by the Gulf-war related uncertainty, IT stocks are available at extremely low terminal growth assumptions.
Nuvama remained positive on the sector outlook, preferring Coforge Ltd, Mphasis Ltd, Hexaware, Firstsource, Tech Mahindra (TechM), LTM Ltd, Infosys Ltd and Tata Consultancy Services Ltd (TCS) as its top stock picks.
For the June quarter, Nuvama said deal flows are likely to remain decent for most companies despite a volatile demand environment. Margins, it said, are likely to be stable across the sector—but for companies with wage hike and exceptional cases – boosted by currency tailwind.
It anticipated Infosys to upgrade its FY27 guidance to 2.5–4 per cent, including 125 bps inorganic growth from 1.5–3.5 per cent. Most other companies are likely to maintain their guidance, even as they may land below the midpoint of the guidance. IT firms are also likely to maintain their margin guidance, Nuvama said.
Expecting Q1FY27 to be a soft quarter with growth affected by the Gulf War and revenue cannibalisation, Nuvama said Tier-1 companies may deliver muted sequential growth while Tier-2 may continue to report solid growth.
"We expect management commentaries to reflect multi-pronged challenges the sector currently faces. While overall outlook stays weak, we do find exciting pockets of growth (especially Tier-2). Overall, we stay positive on sector from medium-to-long-term view even as near-term volatility to persist," it said.
Within Tier-1 companies, Infosys (up 2.3 per cent CC QoQ) is likely to lead growth, followed by Tech Mahindra (up 1.2 per cent), while Tata Consultancy Services (up 0.1 per cent) is likely to remain stable. HCLTech (down 1.1 per cent) and Wipro (down 1.5 per cent) are likely to report a decline in sequential CC sales, Nuvama said.
Tier-2 companies are likely to continue outperforming, led by Hexaware Technologies (up 4.4 per cent CC QoQ), Persistent Systems (up 3.1 per cent) and Mphasis (up 2.1 per cent), while LTIMindtree (up 0.4 per cent) is likely to report relatively softer growth.
Among ER&D players, Cyient (down 0.2 per cent CC QoQ) is likely to remain soft, while L&T Technology Services is anticipated to report 1 per cent CC QoQ growth. Among small-cap companies, Firstsource Solutions (up 2.2 per cent CC QoQ) is likely to lead, with Zensar Technologies and Birlasoft reporting flat to a slight decline. Currency headwinds are likely to be in the range of 10-40 basis points QoQ.
Nuvama Institutional Equities in a fresh note said the IT services model is here to stay and the Generative AI disruption would only lead to bigger opportunities for domestic IT majors. Post the recent sharp correction, it finds valuations of all IT stocks under its coverage highly attractive. The domestic brokerage said following a sharp underperformance over the last six months, primarily due to a negative narrative built by Gen AI platform companies, compounded by the Gulf-war related uncertainty, IT stocks are available at extremely low terminal growth assumptions.
Nuvama remained positive on the sector outlook, preferring Coforge Ltd, Mphasis Ltd, Hexaware, Firstsource, Tech Mahindra (TechM), LTM Ltd, Infosys Ltd and Tata Consultancy Services Ltd (TCS) as its top stock picks.
For the June quarter, Nuvama said deal flows are likely to remain decent for most companies despite a volatile demand environment. Margins, it said, are likely to be stable across the sector—but for companies with wage hike and exceptional cases – boosted by currency tailwind.
It anticipated Infosys to upgrade its FY27 guidance to 2.5–4 per cent, including 125 bps inorganic growth from 1.5–3.5 per cent. Most other companies are likely to maintain their guidance, even as they may land below the midpoint of the guidance. IT firms are also likely to maintain their margin guidance, Nuvama said.
Expecting Q1FY27 to be a soft quarter with growth affected by the Gulf War and revenue cannibalisation, Nuvama said Tier-1 companies may deliver muted sequential growth while Tier-2 may continue to report solid growth.
"We expect management commentaries to reflect multi-pronged challenges the sector currently faces. While overall outlook stays weak, we do find exciting pockets of growth (especially Tier-2). Overall, we stay positive on sector from medium-to-long-term view even as near-term volatility to persist," it said.
Within Tier-1 companies, Infosys (up 2.3 per cent CC QoQ) is likely to lead growth, followed by Tech Mahindra (up 1.2 per cent), while Tata Consultancy Services (up 0.1 per cent) is likely to remain stable. HCLTech (down 1.1 per cent) and Wipro (down 1.5 per cent) are likely to report a decline in sequential CC sales, Nuvama said.
Tier-2 companies are likely to continue outperforming, led by Hexaware Technologies (up 4.4 per cent CC QoQ), Persistent Systems (up 3.1 per cent) and Mphasis (up 2.1 per cent), while LTIMindtree (up 0.4 per cent) is likely to report relatively softer growth.
Among ER&D players, Cyient (down 0.2 per cent CC QoQ) is likely to remain soft, while L&T Technology Services is anticipated to report 1 per cent CC QoQ growth. Among small-cap companies, Firstsource Solutions (up 2.2 per cent CC QoQ) is likely to lead, with Zensar Technologies and Birlasoft reporting flat to a slight decline. Currency headwinds are likely to be in the range of 10-40 basis points QoQ.