Why HCL Tech, Tech Mahindra, among Axis Direct's top 4 IT conviction ideas

While the Indian IT services stocks extended their sell-off on Friday amid concerns around AI disruption. Brokerage firm Axis Direct has highlighted that the integration of Artificial Intelligence (AI) has become a key decision-making factor.

Axis Direct has listed its top conviction ideas for Q3FY26. Here is a look at the top four IT stock picks and one telecom giant..

HCL Technologies | Buy | Target Price: Rs 1,880

The brokerage pointing to its double-digit revenue and margin gains. The company reported in-line results for the quarter, with revenue touching Rs 33,872 crore. A key highlight was the net new bookings of $2.5 billion, the brokerage said.

Axis noted that HCL Tech is heavily focused on vendor consolidation and AI-driven transformation engagements. Axis Direct expects the company’s revenue and EBIT to grow at a CAGR of 9% over FY25-27E. This optimism is driven by AI integration, mining of large clients across end-user industries and greater ability to bag larger deals, it added.

Tech Mahindra | Buy | Target Price: Rs 1,870

Axis highlighted robust deal wins, cost optimisation initiatives, and strategic investments in GenAI capabilities. The company recorded its highest quarterly bookings in five years at $1.1 billion.

Axis believes the company's strategic pivot to AI, disciplined cost execution, and expanding deal pipeline provide high conviction in its recovery.

Persistent Systems | Buy | Target Price: Rs 7,170

Despite high valuations, Axis Direct retains a 'Buy' on Persistent Systems, citing its distinctive value proposition. The company booked healthy order wins with a total contract value (TCV) of $674 million.

“The company is pursuing an AI-led, platform-driven strategy focused on 'AI for Technology' (enhancing engineering productivity), 'AI for Business' (AI adoption and agentic AI development), and Enterprise Data Readiness for AI. Persistent has filed a total of 105 patents for SASVA,” the brokerage said.

Coforge | Buy | Target Price: Rs 2,300

The firm’s executable order book for the next 12 months rose 30.4% YoY to $1.7 Bn, Axis said.

Axis highlighted the company’s ‘AI-First strategy,’ mentioning the launch of ForgeX, an integrated agentic AI engineering platform. The brokerage sees FY27 as a potentially exceptional year for Coforge, driven by a 30% jump in signed orders and the integration of recent acquisitions like Cigniti and Encora.

Telecom stock pick: Bharti Airtel | Buy | Target Price: Rs 2,530

Beyond IT, Axis Direct shared its top telecom pick, Bharti Airtel. The brokerage pointed out that Airtel is shifting gears from heavy 5G capex to monetisation. A key growth area is its data center arm, Nxtra, where the company plans to reach 1 GW capacity in the next three to four years.