HCL Tech, Infosys, Wipro and Tech Mahindra: Trading strategies and Fundamentals highlighted ahead of result season

Sharekhan says that after surprising the street with the robust sequential performance in Q3, Indian IT companies are expected to continue their strong sequential revenue growth momentum in a seasonally weak March quarter. Strong demand tailwinds, ramp-up of deal wins, anticipated broad-based growth across key verticals (including BFSI and retail), and gradual recovery in troubled verticals will contribute to a healthy organic revenue growth of 1.5-3.2% qoq for top five Indian IT services companies on a constant currency (CC) basis.

Sharekhan Preferred picks: 

In Large-cap companies:

Infosys, TechM, HCL Tech, TCS, Wipro Š

See Zee Business Live TV Streaming Below:

In Mid-caps companies:

L&T Tech, Persistent Systems, L&T Infotech, Tata Elxsi, Birlasoft, Mastek and Intellect Design

Sharekhan says that among the top five IT companies, TCS is expected to report leading USD revenue growth of 4.9% qoq, followed by Wipro (3.8% qoq), HCL Tech (including inorganic contribution i.e 3.6% qoq), while Infosys would clock 3.5%. Tech Mahindra (TechM) is expected to report slower revenue growth of 2.4% qoq.

Technical Analysis on Infosys, HCL Tech, Wipro and Tech Mahindra:

Avinash Gorakshkar, Director Research at ProfitMart Securities said that Infosys ahead of quarterly results it has taken support and given Cup & Handle breakout. He thinks Infosys it is poised for 10-20% gains from here on.

Gorakshkar said that HCL Tech charts are looking extremely good. The stock is Making Higher Highs and Higher lows. Given the Cup and Handle Breakout, HCL Tech is looking for a bigger break out above Rs 1060.

Gorakshkar said that on daily charts it is sideways but weekly charts are looking nice as it is making flag patterns. He would wait to break out above Rs 430 on Wipro before buying into the stock.
Ashis Biswas, Head of Technical Research at CapitalVia Global Research has recommended trading strategy in Tech Mahindra. Tech Mahindra has been trading in an upward trending channel, and the positive momentum is likely to continue. He recommends a buy on Tech Mahindra above Rs 1025, maintaining the Target of Rs 1090 with a Stop Loss of Rs 970 for a short-term period.

Sharekhan says that Infosys is likely to report leading growth among tier-I companies on a yoy comparison. Large deal TCV (Total Contract Value) for many Indian IT companies is expected to remain strong during the quarter, but it would decline qoq for a few others (such as Infosys, LTI) owing to a high base of the previous quarter.

Sharekhan says that Infosys, HCL Tech and LTTS are expected to provide revenue growth guidance of 12-14%, 10-12% and 15% respectively for FY2022E, while Wipro is likely to guide 1-3% revenue growth for Q1FY2022E.