Infosys vs TCS vs Wipro: Which IT stock can emerge as a top pick in 2023?

The correction in Indian IT stocks such as Wipro, Infosys and TCS this year has left investors confused about the positions they should take to achieve maximum returns from their portfolios. Among the three IT bellwethers, Wipro stock has slipped the most, declining 45% this year. Wipro shares which closed at Rs 715.20 on December 31, 2021 were trading at Rs 394.95 in the current session. On the other hand, Infosys stock has lost 18.19% and shares of TCS have tumbled just 11.45% in 2022. In a time-span of one year too, Wipro has emerged as the top loser falling 38%, followed by Infosys (11%) and TCS (7.3%).

The weakness in the IT stocks has been caused by geopolitical risks. The ongoing Russia-Ukraine war has dimmed the prospects of business activities across the world, including the US and Europe.

"The crisis in Ukraine, the energy crisis, and a possible recession are heightening uncertainties & weakening the global macro-economic phenomena, which will impact clients," said KRChoksey.

Indian IT firms derive a major chunk of their revenue from the US and Europe.

In terms of sectors too, IT stocks have caused maximum losses to investors this year. While BSE IT index has lost 22.58%, Nifty IT is down 24.54% in 2022.  Nifty IT has declined 18.27% and BSE IT has fallen 16.45% in a year.

With analysts terming near-term prospects of IT stocks uncertain, investors are looking for cues for their IT bets amid the ongoing volatility in the market.

Wipro is the cheapest stock available in terms of price among the IT majors. However, the scrip is not a preferred pick of analysts with some of them inclined in terms of pricier options. Here’s a look at which stock is a value buy, according to the analysts ahead of the likelihood of global market crash and recession.

Also Read: Infosys vs TCS vs Wipro: Which stock is Nomura's top IT sector pick?

Ravi Singhal, CEO, GCL said, “We believe if the Nifty maintains above 27,700, it can reach 32,000; if it falls below 27500, it can reach 25,000. So, in our opinion, you can buy on dips until the 52-week low is not broken.”

Ravi Singh, Vice President and head of research, Share India said, “The IT stocks are struggling for quite some time. However, the weakness in rupee provided some relief to the sector. Also, high percentage of revenues of IT sectors comes from US and other developed countries. So it may face headwinds from weakening demand. But the promising outlook in terms of attractive valuations and robust growth margins makes it the most sought-after sector among the investors."

"TCS, Wipro and Infosys all three are good portfolio stocks and have the potential to deliver high RoE. However, out of TCS and Wipro, Infosys stock is currently trading around value buying levels and may deliver better returns in long term perspective as compared to others. Fundamentally and technically, Infosys holds strong with encouraging growth and robust parameters from a long-term perspective. Investors may hold their buy positions and wait for the target of  Rs 1,750 levels from the long-term perspective,” Singh added.

Abhijeet from Tips2trade said, "Even though Wipro stock price has been beaten down most this year due to poor financial performance thanks to high debt from IT industry standards, there should be a strong recovery in all the three stocks namely TCS, Infosys & Wipro next year. Fundamentally, TCS is stronger in almost every financial ratio as compared to its peer group and hence our pick for 2023 would be TCS. A weekly close above Rs 4,000 should lead to targets of Rs 4650- Rs 5050 in the coming year."