TCS, Infosys Share Price Can Increase Upto 40% As Per These Market Experts

Domestic brokerage and research firm Edelweiss Securities suggest that TCS, Infosys, Wipro, HCL Technologies, Tech Mahindra, and other IT stocks may remain in strong upward momentum, continuing the stellar performance of the last 18 months.

Boom In IT Shares

For the last couple of months, the brokerage firm has been bullish on domestic IT stocks.

Although, now it has accepted that it has “underestimated the tidal digital wave on both growth and margins”. 

Further, Edelweiss said, “We now forecast industry revenue growth for the next three years will be 18-20% while margins, on average, will expand 100-200bps vis-a-vis FY21 led by pricing power and many of the costs not returning to pre-pandemic levels ever,”.

Adding that tech upcycle has just started for IT companies and there is still a long way to go.

Which IT Share To Buy?

The report said, “We strongly believe the Tech Upcycle has progressed just a few quarters and that $500 billion hyperscaler revenues will percolate to services over the next three-five years, which would unleash substantial upsides — even hereon,”.

 The financial company has given a buy rating on IT shares like Infosys, TCS, HCL, L&T Infotech, Coforge, Mindtree, Birlasoft, and First Firstsource Solutions. 

Interestingly, none of IT stock has got a reduced rating under Edelweiss’ coverage.

Target Prices For IT Shares

TCS – Buy with a target of Rs 5000 upside of 29%

Infosys – Buy with a target of Rs 2,354 upside of 40%

HCL Technologies –  Buy with a target of Rs 1,710 upside of 38%

Tech Mahindra – Buy with a target of Rs 1,751 upside 21%

Larsen & Toubro Infotech – Buy with a target of Rs 6,459 upside 16%

LT Technology Services – Buy with a target of Rs 5,004 upside 15%

Mindtree – Buy with a target of Rs 4,575 upside 16%

Coforge – Buy with a target of Rs 7,357 upside 39%

BirlaSoft – Buy with a target of Rs 568 upside 39%

Firstsource – Buy with a target of Rs 251 upside 24%

Further, Edelweiss Securities has assigned 48x one-year forward multiple to Mindtree and 40x multiple to Coforge, LTI and LTTS believing that they are better proxies to hyperscalers and ER&D industry. 

Adding that “We prefer HCL, Infosys and TCS among large-caps, and Coforge, LTI and Mindtree in mid-caps. Among small-caps, we prefer Persistent, Birlasoft and Firstsource,”.

according to Edelweiss, IT services will continue to witness high demand in future. 

Basically, the surge in demand is enabling them to pick large clients to drive growth.