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Best IT Stocks to Buy: Best IT Stocks to Invest, Check Target Price


Best IT Stocks to Invest: Nifty IT Index has underperformed compared to NIFTY50 in the last 1 month. Revenue growth of IT companies has been sluggish in the March quarter of FY 2022. Macro environment also remains weak. At the same time, the margins of companies have come down and the valuation of IT stocks has also become high. Due to all these reasons there has been weakness in Nifty IT. Brokerage house ICICI Securities says that due to higher inflation, companies may stop their discretionary spending for now and their focus on cost optimization may increase. The emphasis on cost is expected to reduce the tech budget.

IT revenue expected to decline

The brokerage house says that macro factors GDP, PMI, S&P 500 revenue are expected to decrease. IT companies have a connection with all these factors, so their business will be affected in the near term. This gives an estimate of ‘J line’ curve in the cast line in P&L in FY23/FY24. For example, the travel cost, which is 2 to 3 per cent of the total IT revenue, is currently down 0.5 per cent. If inflation stays like this in the coming days, then the travel cost will increase. It can be more than the precovid 19 level.

valuation high

The brokerage house says that even though there has been a fall in IT stocks in the recent past, the valuation of many stocks is still high. It is trading at a premium compared to its global peers (IBM, Cognizant, Accenture, Capgemini and Atos).

The brokerage house says that when inflation is at a high level, a bottom up approach in the IT sector is still looking ideal. The sentiment is also not very positive for the overall sector. At the same time, central banks around the world including RBI are running in rate hike mode. In such a situation, there may be pressure on the IT sector in the near term.

stock trading strategy

TCS: HOLD, 3168
Infosys: REDUCE, 1385
Wipro: REDUCE, 425
HCL Tech: HOLD, 1026
Tech Mahindra: HOLD, 1176
Mindtree: HOLD, 3013
Mphasis: ADD, 2705
Coforge: BUY, 4347
Persistent: HOLD, 3668
Zensar: BUY, 348
Sonata: ADD, 712
BirlaSoft: HOLD, 388
Newgen: BUY, 471
Tata Elxsi: SELL, 4,966
Cyient: BUY, 961

(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of digitnews. Markets are risky, so take expert opinion before investing.)


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