(You can now subscribe to our(You can now subscribe to our ETMarkets WhatsApp channelGiven the bottoming out of revenue growth rate and an expectation of the EPS downgrade cycle to end, global brokerage firm Nomura turned bullish on the Indian IT sector with Infosys and Coforge as its top picks.“Our top picks in the sector are Infosys, Wipro and TechM (among large caps), and Coforge and Birlasoft (among midcaps),” said Nomura while also stating that they have upgraded their ratings to Buy for Wipro (from reduce), Infosys (from neutral) and HCL Technologies (from neutral) while also upgrading TCS to Neutral (from reduce).Nomura in its report mentioned that the potential revenue acceleration from FY26F makes them constructive on the sector and that they have tweaked their earnings by -3% to +5% for FY25-26F for coverage universe.“We expect a mixed operating performance for our coverage universe.
Amongst large caps, we expect the strongest revenue growth at +2.5% q-q (in constant currency or cc terms) for Infosys and the weakest at -2% q-q in cc from HCL Tech.
In mid-caps, we expect the strongest revenue growth of +5% q-q in cc from Persistent and the weakest from LTTS at -2%.
Barring TCS (impacted by salary hikes) and HCL Tech (impacted by seasonal factors), we expect margins to remain stable to improve across our coverage universe,” said Abhishek Bhandari, analyst at Nomura, while commenting on the Q1FY25 results preview.The global brokerage firm believes that the GenAI adoption is likely to gain steam in the next 12-18 months and could improve the demand for cloud services and data standardization.Nomura had turned negative on the sector in May 2022 citing an uncertain macroeconomic environment and a worsening revenue growth outlook for enterprises weighing on discretionary demand.The Nifty IT Index was up by 1.01% around 11:00 am, with Coforge, Mphasis and Infosys taking the lead.
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Given the bottoming out of revenue growth rate and an expectation of the EPS downgrade cycle to end, global brokerage firm Nomura turned bullish on the Indian IT sector with Infosys and Coforge as its top picks.“Our top picks in the sector are Infosys, Wipro and TechM (among large caps), and Coforge and Birlasoft (among midcaps),” said Nomura while also stating that they have upgraded their ratings to Buy for Wipro (from reduce), Infosys (from neutral) and HCL Technologies (from neutral) while also upgrading TCS to Neutral (from reduce).Nomura in its report mentioned that the potential revenue acceleration from FY26F makes them constructive on the sector and that they have tweaked their earnings by -3% to +5% for FY25-26F for coverage universe.“We expect a mixed operating performance for our coverage universe. Amongst large caps, we expect the strongest revenue growth at +2.5% q-q (in constant currency or cc terms) for Infosys and the weakest at -2% q-q in cc from HCL Tech. In mid-caps, we expect the strongest revenue growth of +5% q-q in cc from Persistent and the weakest from LTTS at -2%. Barring TCS (impacted by salary hikes) and HCL Tech (impacted by seasonal factors), we expect margins to remain stable to improve across our coverage universe,” said Abhishek Bhandari, analyst at Nomura, while commenting on the Q1FY25 results preview.The global brokerage firm believes that the GenAI adoption is likely to gain steam in the next 12-18 months and could improve the demand for cloud services and data standardization.Nomura had turned negative on the sector in May 2022 citing an uncertain macroeconomic environment and a worsening revenue growth outlook for enterprises weighing on discretionary demand.The Nifty IT Index was up by 1.01% around 11:00 am, with Coforge, Mphasis and Infosys taking the lead.
