IT sector poised for growth? Know what Macquarie makes of 3 major scrips

Equity researchers from an international brokerage, Macquarie, have released a report analysing the H1B visa program, concluding that a flat wage floor for the program would be impractical. The report, further highlighted that major Indian IT companies account for a relatively small proportion of H1B sponsors, while a significant number of smaller firms rely heavily on the program. It suggests that the sector is undervalued and poised for growth, despite the challenges posed by potential policy changes related to the H1B visa program.

In the report, the brokerage said a "long tail" of over 61,000 filers accounted for a substantial 79.6 per cent of H1B visas issued in FY24. Moreover, no single company received more than 2.7 per cent of the total visas issued, indicating a diverse range of beneficiaries.

What is H-1B visa program?

The H-1B visa program is a temporary US work visa that allows companies to hire foreign professionals in speciality occupations. It's particularly popular in the tech sector, where Indian IT companies utilise it to send skilled workers to the US for projects.

What do analysts expect?

Analysts expected that the current "correction" in the Indian IT services sector presents a compelling opportunity for investors. Meanwhile, the brokerage has handpicked major domestic IT companies stocks ranging from TCS to Persistent Systems; here's the list

TCS Share Price Target

The analysts maintained an 'outperform' rating on Tata Consultancy Services shares with a target of Rs 5,710.

HCLTech Share Price Target

With the same rating, Macquarie kept its target for the HCL Tech stock at Rs 2,020.

Persistent Systems Share Price Target

For the Persistent Systems stock, they (analysts) maintained an 'outperform' with a target of Rs 6,750.

IT companies vs top companies:

Over the past five years, the Nifty IT index has delivered a return of 28.9 per cent, outperforming the Nifty 50 index, which surged by 18 per cent during the same period.

However, in the last three years following the COVID-19 pandemic, the technology index underperformed. Between 2022 and 2024, Nifty IT registered a modest return of 3.8 per cent, while the Nifty 50 index delivered a return exceeding 10 per cent.