Stocks to buy: JM Financial expects soft Q2 season for IT majors; check target prices for Infosys, TCS, others

The IT companies are all set to begin the Q2 season, with TCS kickstarting the cycle on October 8. JM Financial noted that investors expect some improvement in growth, given that Q2 is seasonally a stronger quarter. However, macro uncertainty and AI-led productivity continue, while competitive intensity has also increased, with the industry now entering the fourth year of subdued growth, it warned. Overall, the domestic brokerage expects another soft quarter for most large tiers. Here are its ratings and target prices for 6 major IT stocks under its coverage.

JM Financial has an 'Add' rating on the shares of Tata Consultancy Services (TCS) with a target price of Rs 2,375 apiece. This implies more than 14% upside potential from last week’s closing level of Rs 2,082 apiece. For the earnings print of India’s largest IT services company, the domestic brokerage said commentary on demand recovery, ramp up on the BSNL deal and margin recovery towards the 25% FY27 exit aspiration amid AI investments will be among the key things to watch out for. TCS will announce Q2 earnings on October 2. JM Financial expects the company to report marginal improvement in margins as wage hikes are behind, majorly offset by investments in the business.

JM Financial has an ‘Add’ rating on the shares of Infosys with a target price of Rs 1,130 apiece. This implies nearly 13% upside potential from last week’s closing level of Rs 1,000.2 apiece. Infosys will announce its Q2 earnings on October 23. The domestic brokerage expects the company to report healthy deal wins and a 30 bps sequential increase in margins.

JM Financial has an ‘Reduce’ rating on the shares of HCL Technologies with a target price of Rs 1,135 apiece. This implies nearly 10% downside potential from last week’s closing level of Rs 1,258 apiece. The company is set to announce its results for the July-September quarter of the ongoing FY27 on October 12. The domestic brokerage expects HCL Tech to report an overall marginal sequential improvement in margins.

JM Financial has an ‘Reduce’ rating on the shares of Wipro with a target price of Rs 160 apiece. This implies nearly 2.45% downside potential from last week’s closing level of Rs 164.02 apiece. The domestic brokerage expects Wipro’s TCV to be in line with that in the past quarters andexpect cc guidance for Q3 FY27 at -1.5% to +0.5%. It also estimates gradual improvement in margin given wage hikes are behind.

JM Financial has an ‘Add’ rating on the shares of Tech Mahindra with a target price of Rs 1,705 apiece. This implies more than 10% upside potential from last week’s closing level of Rs 1,548 apiece. JM Financial expects Tech Mahindra to see its margin expand 20 bps in Q2 despite wage hikes largely due to Project Fortius, with growth likely to be led by recently won telecom deals.

JM Financial has an ‘Reduce’ rating on the shares of LTI Mindtree with a target price of Rs 3,965 apiece. This implies around 3% downside potential from last week’s closing level of Rs 4,083 apiece. The domestic brokerage expects the company to see marginal improvement in EBIT margin, while it highlighted macro uncertainty, softness in tech vertical and delayed ramp-up of the CBDT deal.
Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.