TCS, Infosys, HCL Tech, TechM, Wipro, LTM: Check fresh targets for top IT stocks ahead of Q2 results

JM Financial said Indian IT could be headed for another soft quarter in Q2FY27, even as the NSE IT index has gained about 3 per cent over the past three months and outperformed the Nifty by about 7 per cent. According to the brokerage, the rally was driven by Q1 results being seen as in line against soft expectations and by easing concerns around AI-led disruption.

Going into Q2FY27, the market is expecting some improvement because it is usually a stronger quarter seasonally. However, JM Financial said macro uncertainty, AI-led productivity pressure and rising competitive intensity continue, with the industry now in its fourth year of subdued growth.

JM Financial expects most large-tier companies to post constant-currency sequential (QoQ) growth of -0.5 per cent to 2.6 per cent, or -0.1 per cent to 6.6 per cent year-on-year (YoY). The NSE IT index is currently trading at about 16 times one-year forward consensus EPS, and the brokerage said investors should remain selective.  

Guidance revisions in focus JM Financial said Infosys may trim the upper end of its FY27 revenue growth guidance to 2.5 per cent from 3 per cent, while retaining the lower end at 1.5 per cent. The current guidance includes about 170 basis points from acquisitions. Margin guidance, in its view, is likely to remain unchanged at 20-22 per cent.

For HCL Technologies Ltd, JM Financial expects the IT Services revenue growth guidance range to narrow to 2-4 per cent from 1.5-4.5 per cent, while keeping the midpoint unchanged. It said the acquisition of HPE’s telco business could add 70-80 basis points to IT Services growth in FY27. At the overall company level, it expects guidance to narrow to 1.5-3.5 per centwith Jaspersoft and HPE telco together adding about 90 basis points. Margin guidance is likely to remain at 17.5-18.5 per cent.

JM Financial said Wipro Ltd is likely to guide for constant-currency revenue growth of -1.5 per cent to 0.5 per cent QoQ in Q3FY27.  

Margins, deals and H2 commentary According to JM Financial, margin expansion may remain limited because the rupee has not depreciated meaningfully in Q2FY27, at about 1 per cent QoQ, and revenue growth remains soft. On deal activity, it expects Tata Consultancy Services Ltd to report deal TCV of $8-10 billion, though the Porsche deal is unlikely to be included because of pending regulatory approvals.

Infosys Lltd is expected to report $2.5-3 billion, HCL Tech $3-3.5 billion and LTM $1.4-1.5 billion. It said management commentary on the second half of FY27 will be important, especially given the seasonally soft period ahead. It said it would watch commentary on furloughs, discretionary spending and whether current demand trends are sustainable.  

Global cues and stock preference Among global developments, the brokerage flagged Accenture and Anthropic’s plan to set up a team to evaluate and test AI model safeguards, with at least $1 billion each to be invested over five years in AI safety. It also noted that Endava’s board has placed its CFO on administrative leave pending an independent investigation into accounting treatment of certain customers and supplier agreements.

JM Financial said it prefers Tech Mahindra Ltd over Wipro in the large-tier space for Q2FY27, citing better growth visibility for Tech Mahindra from the ramp-up of large deals, while Wipro continues to lag peers. It added that it has made marginal FY27-FY29 EPS revisions for most companies to reflect exchange rates and other parameter changes.  

Rating and price targets JM Financial has maintained an 'ADD' target rating on TCS (new target price: Rs 2,375), Infosys (new target price: Rs 1,130) and Tech Mahindra (new target price: Rs 1,705). It has retained a 'REDUCE' rating on HCL Tech (new target price: Rs 1,135), Wipro (new target price: Rs 160) and LTM (new target price: Rs 3,965.