Coforge and Persistent Systems rose over 4% each, while India’s largest software company, TCS, gained 3%. LTIMindtree was up more than 3%, while HCL Tech and Tech Mahindra traded over 2.5% higher. Wipro also advanced over 2%.
CLSA’s high-conviction picks are Persistent Systems and Coforge. It maintains an Outperform rating on Infosys, Tech Mahindra, TCS and LTIMindtree, while HCL Tech and Wipro are rated Hold, according to a CNBC-TV18 report.
Analysts at the firm said they do not see any AI-led pricing pressure in deal renewals for IT services companies, although some delays in client decision-making are emerging due to AI-related shifts and the West Asia crisis.
It noted that direct exposure to West Asia remains low, but the broader macro impact is still uncertain. Despite this, deal pipelines remain strong and sector valuations are around their 10-year average, making them attractive.
CLSA is the latest brokerage to take a bullish stance on the sector. Last week, Nuvama Institutional Equities recommended buying all top 10 IT stocks. The domestic brokerage added that the Indian IT industry is once again at “that crossroads” where a new technology—this time Gen-AI—is being projected as an existential threat to the offshore services model, much like Y2K, remote infrastructure management, and the 2015–18 digital wave before it.
Against that backdrop, the brokerage has assigned a “Buy” rating to all top 10 IT services names—TCS, Infosys, HCL Tech, Wipro, Tech Mahindra, LTIMindtree, Coforge, Persistent, Mphasis and Hexaware—and trimmed target multiples only marginally to factor in Gen-AI risk, while still building in 14–84% upside over the next 12–15 months. It reiterates a preference for Coforge, LTIMindtree, Persistent, Mphasis, Infosys, and TCS, calling Coforge its top pick. It argues that investors “would make handsome returns in any/all of these stocks from current levels” as the cycle turns from near-term AI-driven revenue deflation to a much larger AI services opportunity estimated at $300–400 billion by 2030.IT stocks will remain in focus this week as investors track the outcome of the US Federal Reserve’s FOMC meeting. The outcome is likely to influence sentiment around IT stocks, as these companies derive a significant portion of their revenue from the US market. Markets are currently pricing in a near certainty of a hold in the 3.5%-3.75% range.
Indian IT stocks saw a sharp decline earlier this year after Anthropic launched plug-ins for its Claude Cowork agent, which can automate tasks across legal, sales, marketing, and data analysis functions. Some analysts raised concerns about the need for IT services companies to gradually reduce staff as cheaper and faster AI takes over.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)