TCS, Infosys, HCL Tech, Wipro, TechM: Which IT stocks to buy, sell or hold; check targets
Systermatix Institutional Equities has shared its review for the June 2025 quarter earnings of the Indian IT companies and it has buy rating on only one out of six companies under its coverage.
- Sep 1, 2025,
- Updated Sep 1, 2025 2:02 PM IST
Domestic brokerage firm Systermatix Institutional Equities has shared its review for the June 2025 quarter earnings of the Indian IT companies and it has buy rating on only one out of six companies under its coverage. The brokerage noted that this was a muted quarter for the IT counters but strong order backlog offers cushion.
IT services companies under our coverage reported a weak 1QFY26, amid muted demand, delayed deal ramp-ups, and softness in manufacturing and retail verticals, said Systermatix. Discretionary spending continued to be weak, as clients remained cautious amid macro and geopolitical uncertainties, it said.
Systematix has highlighted Tata Consultancy Services (TCS) as its preferred pick within the Tier-1 IT sector, citing a strong order book and recovery in discretionary spending as factors supporting its growth. TCS is trading at a discount to its long-term average, positioning it favourably according to Systematix. Meanwhile, Infosys (INFY) displayed stronger growth in the first quarter of FY26, reporting a 4.5 per cent quarter-on-quarter increase in US dollar terms, compared to TCS's 0.6 per cent degrowth.
Within the IT services sector, modest single-digit revenue growth was observed in the first quarter of FY26. Despite this, companies continue to face weak demand due to tariff impacts and reduced discretionary spending. The banking, financial services, and insurance (BFSI) sector remained resilient, although manufacturing, retail, and healthcare sectors experienced pressures.
Total Contract Values (TCVs) were robust across companies, yet margins stayed under pressure despite measures like wage deferrals and cost optimisation. Systematix notes cautious guidance for the sector, with INFY projecting 1–3 per cent constant currency growth for FY26 and Wipro forecasting a range of -1 per cent to +1 per cent growth for the second quarter of FY26.
The technology spending by top U.S. banks reached a record $9.7 billion in the second quarter of CY25, marking a 7 per cent year-on-year increase. This suggests early signs of recovery in the BFSI space, potentially translating into more discretionary deals and large-scale BFSI programmes for Indian IT firms starting in CY25.
INFY and HCL Tech raised the lower end of their revenue guidance. HCL Tech raised the revenue guidance to 3-5 per cent from 2-5 per cent, signaling no further deterioration in demand going forward, it said. A strong order backlog and healthy deal pipeline could also limit the downside, it noted.
"However, clients’ conservative approach towards deals is weighing on enterprise tech spending. We expect a rate cut by the Fed to trigger a bounce back. Stocks with valuation buffers are better placed, with TCS preferred among the large caps," said Systematix. It has 'buy' rating on TCS with a target price of Rs 3,864
The brokerage has suggested to hold Infosys (target price: Rs 1,644), Wipro (target price: Rs 225), HCL Technologies (target price: Rs 1,592 )and Sonata Software (target price: Rs 423). However, it has a 'sell' rating on Tech Mahindra with a target price of Rs 1,112 on the stock.
Domestic brokerage firm Systermatix Institutional Equities has shared its review for the June 2025 quarter earnings of the Indian IT companies and it has buy rating on only one out of six companies under its coverage. The brokerage noted that this was a muted quarter for the IT counters but strong order backlog offers cushion.
IT services companies under our coverage reported a weak 1QFY26, amid muted demand, delayed deal ramp-ups, and softness in manufacturing and retail verticals, said Systermatix. Discretionary spending continued to be weak, as clients remained cautious amid macro and geopolitical uncertainties, it said.
Systematix has highlighted Tata Consultancy Services (TCS) as its preferred pick within the Tier-1 IT sector, citing a strong order book and recovery in discretionary spending as factors supporting its growth. TCS is trading at a discount to its long-term average, positioning it favourably according to Systematix. Meanwhile, Infosys (INFY) displayed stronger growth in the first quarter of FY26, reporting a 4.5 per cent quarter-on-quarter increase in US dollar terms, compared to TCS's 0.6 per cent degrowth.
Within the IT services sector, modest single-digit revenue growth was observed in the first quarter of FY26. Despite this, companies continue to face weak demand due to tariff impacts and reduced discretionary spending. The banking, financial services, and insurance (BFSI) sector remained resilient, although manufacturing, retail, and healthcare sectors experienced pressures.
Total Contract Values (TCVs) were robust across companies, yet margins stayed under pressure despite measures like wage deferrals and cost optimisation. Systematix notes cautious guidance for the sector, with INFY projecting 1–3 per cent constant currency growth for FY26 and Wipro forecasting a range of -1 per cent to +1 per cent growth for the second quarter of FY26.
The technology spending by top U.S. banks reached a record $9.7 billion in the second quarter of CY25, marking a 7 per cent year-on-year increase. This suggests early signs of recovery in the BFSI space, potentially translating into more discretionary deals and large-scale BFSI programmes for Indian IT firms starting in CY25.
INFY and HCL Tech raised the lower end of their revenue guidance. HCL Tech raised the revenue guidance to 3-5 per cent from 2-5 per cent, signaling no further deterioration in demand going forward, it said. A strong order backlog and healthy deal pipeline could also limit the downside, it noted.
"However, clients’ conservative approach towards deals is weighing on enterprise tech spending. We expect a rate cut by the Fed to trigger a bounce back. Stocks with valuation buffers are better placed, with TCS preferred among the large caps," said Systematix. It has 'buy' rating on TCS with a target price of Rs 3,864
The brokerage has suggested to hold Infosys (target price: Rs 1,644), Wipro (target price: Rs 225), HCL Technologies (target price: Rs 1,592 )and Sonata Software (target price: Rs 423). However, it has a 'sell' rating on Tech Mahindra with a target price of Rs 1,112 on the stock.