Coforge, KPIT Tech, Cyient among top IT stocks to buy for upto 44% upside amid AI recovery

After a volatile 12-18 months marked by global macro uncertainty, delayed technology spending and concerns over discretionary IT budgets, Indian technology stocks are showing early signs of recovery. Several midcap IT names remain well below their historical peaks despite improving deal pipelines, growing AI adoption and stronger order books.

Brokerage firm SMIFS has identified KPIT Technologies, Coforge and Cyient as its preferred picks in the Indian IT sector, saying these companies offer differentiated positioning, strong revenue visibility and attractive risk-reward profiles. In a recent sector report, SMIFS said the three firms are better placed than traditional IT services peers to benefit from themes such as software-defined vehicles, AI-led transformation, digital engineering and lifecycle engineering services.

SMIFS said Indian IT stocks have faced headwinds over the past year, including slower decision-making by global clients, weak banking and technology spending, geopolitical uncertainty and concerns over AI-led disruption. Even so, the brokerage said the worst of the slowdown may be over, pointing to healthy deal pipelines, rising global AI spending and continued enterprise investment in modernisation, cloud migration, cyber security and engineering-led transformation programmes.
 

Why the sector is back in focus
SMIFS said mid-tier IT firms have outperformed larger peers in winning large contracts and capturing new technology opportunities. According to the brokerage, investors are becoming more selective and are rewarding companies with strong order books, niche capabilities and exposure to structural growth themes rather than broad-based outsourcing alone.

KPIT Technologies: Play on software-defined vehicles
Among its top picks, SMIFS said KPIT Technologies Ltd stands out as a pure-play beneficiary of the global automotive software transformation. The brokerage said KPIT is moving from a traditional services model to a higher-value products and solutions business, with the share of products and solutions in revenue expected to rise from about 15 per cent at present to nearly 60 per cent over the next three years, which could support better scalability and margins.

SMIFS said KPIT has built capabilities across software-defined vehicles, electrification, autonomous driving and connected mobility. It also highlighted the company’s end-to-end chip-to-cloud expertise, which allows it to participate across the automotive software lifecycle.

The brokerage pointed to record deal momentum, with total contract value at $349 million in the March quarter of FY26 and the book-to-bill ratio improving to 1.9 times. SMIFS has a 'buy' rating on KPIT Technologies with a target price of Rs 975, implying about 32 per cent upside from its reference price.
 

Coforge: Growth led by large deal wins
SMIFS was also positive on Coforge Ltd, describing it as one of the fastest-growing mid-tier IT services companies globally. The brokerage said the company is seeing strong momentum in healthcare, high-tech and travel. Healthcare and high-tech revenues rose 98 per cent year-on-year in FY26, while the travel business grew 62 per cent. Banking growth moderated because of client-specific issues, though management expects a recovery in FY27.

SMIFS said Coforge’s order book remains a major strength. The company reported fresh order intake of $648 million in the March quarter and ended FY26 with an executable order book of $1.75 billion, the highest in its history.

The brokerage added that Coforge is well placed to benefit from AI-led transformation spending, having completed more than 150 AI engagements, while continuing to strengthen its digital engineering capabilities through acquisitions such as Encora and Cigniti. SMIFS has assigned a 'buy' rating on Coforge with a target price of Rs 1,950, indicating roughly 32 per cent upside.
 

Cyient: Lifecycle engineering opportunity
For exposure to engineering research and development, SMIFS said it prefers Cyient Ltd. The brokerage said Cyient’s shift from a conventional ER&D player to a lifecycle engineering partner could significantly widen its addressable market. Management has estimated that the opportunity could expand from a traditional $100 billion ER&D outsourcing market to nearly $2 trillion across industries already served by the company.

SMIFS said this transition could create more recurring revenue streams, deepen client relationships and improve long-term visibility. It noted that Cyient has faced near-term challenges due to project delays and investments in its semiconductor engineering business, but said these investments could strengthen its long-term positioning in a high-growth segment.

Strong deal wins in aerospace, rail and connectivity were also cited by SMIFS as supporting the growth outlook. The brokerage has a 'buy' rating on Cyient with a target price of Rs 1,275, suggesting about 44 per cent upside, the highest among its preferred IT picks.

SMIFS said valuations across several mid-cap IT stocks remain attractive after the correction even as fundamentals improve. The brokerage said KPIT Technologies, Coforge and Cyient offer different growth drivers through automotive software, AI-led digital transformation, large deal execution and lifecycle engineering, making them its highest-conviction ideas in the Indian IT sector.