'Remain Positive on IT Sector': Gaurang Shah; weighs in on Infosys, Tata Elxsi

Gaurang Shah, Senior Vice-President at Geojit Financial Services, maintained a constructive view on the information technology (IT) sector despite mixed earnings. "One can dissect the numbers (earnings) in one zone way, but according to us, they were not that bad. You can't ignore the IT sector. We remain positive on most of the large-cap names and select mid- & small-caps," Shah said in an interview with Business Today on Wednesday.

He advised investors to follow a balanced approach by holding a combination of large- and mid-cap IT stocks. Among the large-caps, he expressed preference for Tata Consultancy Services (TCS), Infosys, HCL Technologies and Tech Mahindra. From the mid-cap segment, he favoured Coforge, LTIMindtree, L&T Technology Services and Cyient.

"I think a mix of both mid- and large-cap IT stocks will be a good combination," Shah noted.

Speaking about Infosys, which is scheduled to announce its Q1 FY26 (June 2025-26) earnings later today, Shah said the stock is attractively valued from a long-term perspective. "It isn't cheap, though. You may start accumulating and add more on dips, which would be the better strategy. But ahead of the numbers, I would be cautious," he advised.

However, Shah turned bearish on Tata Elxsi, shifting his earlier positive outlook to a 'Sell' rating. "We've changed our positive outlook to 'Sell' on Tata Elxsi," he said, citing consistent weak quarterly results.

Tata Elxsi reported a 22 per cent year-on-year decline in its consolidated net profit for Q1 FY26 at Rs 144 crore, compared to Rs 184 crore in the corresponding quarter of the previous year. Revenue from operations dropped 3.7 per cent to Rs 892 crore from Rs 926 crore, mainly due to macroeconomic headwinds and client-specific challenges.

Meanwhile, Indian equity benchmarks were in early trade, tracking a positive trend in Asian shares.