Top IT services stocks offer 10-15% upside, says Investec

Mumbai: Brokerage Investec said the risk-reward profile has improved for most IT services stocks over the past month, with the top ones now offering over 10-15% one-year return potential compared to limited returns earlier. The brokerage has a 'Buy' rating on six IT services firms and a 'Hold' rating on two, projecting 2-27% upside in these stocks.

In its latest report, Investec upgraded Infosys to 'Buy' from 'Hold' and set a price target of ₹1,655, implying nearly 8% gains from Monday's close.

The brokerage prefers Tech Mahindra, Infosys, and TCS among the larger stocks, and Mphasis, Zensar, and KPIT among the mid-sized ones. "We believe FY27E is likely a year of recovery led by a potential recovery of discretionary spends catalysed by declining interest rates in the US and normalisation of trade related uncertainties, mainstream implementation of the foundational layer on data for AI projects and benefits on execution from recent deal wins," the analysts said in the note.