Brokerage Picks IT Stocks For Potential Gains Before Second Quarter Results

Brokerage firm HDFC Securities has released a list of Indian IT stocks to buy ahead of the upcoming second quarter earnings season for financial year 2027. The brokerage keeps a positive stance on most IT stocks, naming Larsen and Toubro Technology Services, Mphasis, and Coforge as picks that offer good upside from current levels.

Stock Targets And Ratings

Tata Consultancy Services has a new target price of ₹2,470 with an add rating, which implies a 20 percent upside. Infosys has a target of ₹1,250 with a buy rating, offering a 26 percent upside. HCL Technologies holds a revised target of ₹1,370 with an add rating for an 11 percent upside, while Wipro has a ₹185 target indicating a 17 percent upside. Tech Mahindra has an add rating with a target of ₹1,660 for a 9 percent upside. L&T Technology Services has a revised target of ₹5,270 with a buy rating for a 30 percent upside. Mphasis carries a target of ₹2,840 for a 32 percent upside, and Persistent Systems has a target of ₹6,070 for a 15 percent upside. Both Mphasis and Persistent Systems received add ratings.

Sector Outlook And Challenges

HDFC Securities states that the Indian IT sector is expected to show weak growth in the second quarter of fiscal year 2027, even though this period is usually a strong time for the industry. Growth for large IT companies is estimated to range from a 0.4 percent decline to 2 percent growth sequentially. Mid-sized IT firms could see growth between 0.6 percent and 6.3 percent, helped partly by acquisitions. New business deals remain weak as clients take longer to make decisions and cut discretionary technology spending due to economic uncertainty. IT companies also face pricing pressure because clients expect them to pass on cost savings from higher productivity through artificial intelligence. With the first half of the fiscal year likely to be weaker than expected, the sector recovery depends heavily on the second half. However, the third quarter is usually weaker due to seasonal employee furloughs, which could limit overall growth for the year.

Context

Stock brokerages regularly issue target prices and ratings to guide investors based on expected company earnings and market conditions. Earnings seasons are periods when publicly listed companies report their financial performance for the preceding quarter, drawing close attention from stock market participants.