Coforge, LTIMindtree, TechM, Mphasis, Persistent, Infosys and TCS: Top IT stocks to buy

Nuvama Institutional Equities in its March quarter preview note for IT sector said it now has ‘Buy’ rating on all the top 10 IT services companies, saying it has preference for Coforge Ltd, LTIMindtree Ltd, Tech Mahindra Ltd (TechM), Mphasis Ltd, Persistent Systems Ltd, Infosys Ltd and Tata Consultancy Services Ltd (TCS).

Nuvama said the IT sector has sharply underperformed the markets in FY26 owing to a negative narrative built by Gen AI platform companies and tariff-related uncertainty. It continued to believe the IT Services model is here to stay and the Gen AI disruption would only lead to bigger opportunities for them. 

Nuvama had on March 10 in a report titled "Reports of my death are greatly exaggerated" suggested a target of Rs 2,100 on Coforge, Rs 6,100 on LTIMindtree, Rs 1,650 on Tech Mahindra, Rs 3,100 on Mphasis, Rs 6,000 on Persistent Systems, Rs 1,650 on Infosys and Rs 3,300 on TCS. 

"Post the recent sharp correction, we find the valuation of all stocks highly attractive. Reverse DCF also indicates to extremely low terminal growth assumption. We remain positive on the sector," it said.

Nuvama said Q4FY26E is likely to be a modest quarter, reflecting the current environment fraught with multiple uncertainties (the Gulf War, Gen AI, US tariffs). Most companies are likely to post muted sequential growth, but largely in-line with expectations, it added.

"Tier-2 companies shall continue to outperform their Tier-1 counterparts," Nuvama said. The brokerage said the quarter should see the benefit of a sharp rupee deprecation in earnings (especially YoY), with margins largely remaining intact. 

"We expect management commentaries to reflect the multi-pronged challenges the sector currently faces. Overall, we remain positive on the sector from a medium to long-term perspective, while near-term volatility might persist (read our recent sector report here)," Nuvama said.

It said deal flows are likely to stay decent despite a volatile demand environment with cost-takeout deals making up for a bulk of incremental wins. Margins are likely to be volatile across a few companies—affected by wage hikes and restructuring costs, partly offset by operating leverage and currency tailwinds, the broking firm said.

Nuvama anticipated Infosys to provide FY27 ‘organic’ revenue growth guidance of 2–5 per cent and HCL Technologies 3–6 per cent services growth guidance. 

Margin guidance is likely to be maintained by almost all companies for FY27, with HCL Tech likely to upgrade the same by 50 basis points, it said.

Nuvama expects minus 1.7 per cent to 4.1 per cent constant currency (CC) sequential growth for IT firms. Within Tier-1 companies, TCS (up 1.2 per cent CC QoQ) is likely to report decent growth, followed by Wipro (up 0.5 per cent CC QoQ) and TechM (flat CC QoQ), Infosys (down 0.8 per cent CC QoQ) and HCL Tech (down 1.6 per cent CC QoQ) are expected to report QoQ decline due to seasonal factors. 

Tier-2 companies are expected to continue their outperformance, led by Persistent Systems (up 4 per cent CC QoQ), Mphasis (up 2.3 per cent CC QoQ), Coforge (up 2 per cent CC QoQ) and LTIMindtree (up 1.5 per cent CC QoQ), while Hexaware Technologies Ltd (0.6 per cent CC QoQ degrowth) may see a marginal QoQ decline. 

"Among ERD players, Cyient is likely to report flat growth, while LTTS (down 1 per cent CC QoQ) may see a decline due to ongoing restructuring. Among small caps, Firstsource (up 4.1 per cen CC QoQ, including inorganic) is likely to lead the pack, with Zensar and Birlasoft reporting QoQ decline. Currency tailwinds are likely to be in the range of 10–80bp QoQ this quarter," it said.