Infosys, Mphasis, Persistent, LTM, TechM: Top 5 IT stock picks, target prices

Anand Rathi Shares and Stocks in a fresh note on IT sector said Tech Mahindra Ltd (TechM), LTM Ltd and Infosys Ltd are its top large cap stock picks while it pefers Persistent Systems and Mphasis in the midcap space. These stocks can deliver 17-23 per cent upside over the next 12 months, the brokerage target suggested.

Anand Rathi said Indian IT sector has gone through a nearly three-year spending recession, marked by weak discretionary budgets, elongated deal cycles, H-1B headwinds, AI-driven revenue deflation and a February 2026 sell-off triggered by fears that agentic tooling, including Claude Cowork and COBOL modernisation, would automate the legacy stack directly.

However, it believes that fear inverts the actual setup. "Our core thesis is that the AI cycle is pivoting from 'building capacity' to 'proving payback' — a transition that is inherently services-heavy and plays squarely to Indian IT's strengths in deployment, integration, governance and legacy modernisation," it said.

The brokerage said value is migrating from the layer that funds the AI build to the layer that deploys it. First to enterprise software platforms and then to services firms that integrate and run them.

This, it said, is the cloud playbook being rerun: capex builds first and returns arrive later, benefiting different players, as seen with railways, fibre and the 2015-19 cloud J-curve. Here are target prices what the brokerage said on its top 5 IT stock picks.

Tech Mahindra
Anand Rathi said Tech Mahindra is entering FY27 as the final year of its three-year turnaround, with the driver shifting from margin recovery to above-peer revenue growth, supported by its strongest quarter since the programme began, accelerating deal momentum, a healthy order book with no material deterioration in enterprise demand, and Project Helix, spanning consulting, platforms, engineering and partnerships, alongside its Agentic Development & Modernization Services portfolio.

LTM

Anand Rathi said LTM is supported by strong revenue growth visibility, driven by large-deal momentum, recovery in key BFSI and top client accounts, strategic expansion in Europe through the Randstad acquisition, execution of its Lakshya'31 growth strategy, and scope for higher shareholder returns through an increase in dividend payout.

Infosys

Anand Rathi said Infosys' FY27 is expected to be muted; however, BFSI (28 per cent mix) and EURS (13 per cent) should perform well. FY28 is expected to improve on the back of LTM's large-deal TCV growth of 30 per cent in Q1, Anand Rathi said. Rising AI monetisation, which accounts for 8.2 per cent of revenue and rose 22 per cent CQGR from Q3 to Q1, along with Topaz Fabric/Cobalt and platform-led acquisitions, is expected to support growth and margins. FY26-28E adjusted EPS CAGR of 7.8 per cent, a 4.2 per cent dividend yield, 8.1 per cent FCF yield and 1.9 times adjusted PEG offer valuation support.

Persistent Systems

Persistent remains well-positioned for industry-leading growth, supported by strong AI-led execution through platforms such as Sasva and iAURA, disciplined execution, accelerating demand in BFSI (34 per cent of revenue) and healthcare (25 per cent of revenue), and the proposed Nagarro acquisition, which expands its European presence, addressable market and long-term growth opportunities.

Mphasis

Mphasis is well positioned to capture market share, supported by an all-time-high pipeline, up 28 per cent YoY, with AI-led deals now accounting for around 70 per cent of it, versus around 12 per cent at Mphasis AI's launch. It is also supported by a higher steady-state TCV baseline, platform-led execution through Neo IP, Continuum AI and Tria, and improving profitability through outcome-based models.