IT stocks to buy: JPMorgan upgrades LTIMindtree, Persistent Systems, KPIT Tech; initiates coverage on Coforge

IT stocks to buy: JP Morgan, in its latest report on the IT sector, notes that the demand environment has moved sideways since reaching a bottom in 2HCY23, with no perceptible improvement seen not only in 4Q but also into 1QFY25. According to the global brokerage, the sector is likely to witness poor 4Q exit rates, and the companies will deflate FY25 guidance.

The analysts at the brokerage expect mid-cap stocks to outperform big IT firms and ERDs (engineering R&Ds) to outperform IT firms. As per the brokerage, FY25 revenue guidance of 2-4 per cent at Infosys and 4-6 per cent at HCL Tech could surprise investors.

The brokerage is overweight on Infosys, Persistent Systems, and L&T Technology Services Limited (LTTS).

Tactically, non-discretionary heavy portfolios (neutral-rated TCS, Mphasis) could outperform discretionary (overweight-rated Infosys and neutral-rated LTIMindtree, Wipro) until recovery picks up in 2HCY24, the brokerage further said.

LTIMindtree share price target

The brokerage has upgraded the global technology consulting and digital solutions company to a "neutral" rating from an "underweight" call earlier; however, it has reduced the target price to Rs 5,200 from Rs 5,400.

Persistent Systems share price target

JP Morgan has upgraded the mid-cap IT firm to an "overweight" call from a "neutral" rating with a raised target of Rs 4,400 from Rs 3,600.

KPIT Tech share price target

The brokerage has upgraded KPIT Technologies to a neutral rating from an underweight call. The brokerage has raised the target to Rs 1,400 from Rs 1,150.

Coforge share price target

JP Morgan has initiated coverage on Coforge with an overweight call with a target price of Rs 7,000. The brokerage sees an upside of 25.9 per cent on the IT stock from current levels.

According to the brokerage's note, the class-leading cross-cycle is the growth hero for the scrip. Focused execution helps Coforge outperform downcycles, the brokerage said.

The analysts at the brokerage expect outstanding client mining records to continue. "Structural margin expansion is ahead after ESOP-led dilution. Industry-leading earnings growth at reasonable valuations," the brokerage noted in its report.

TCS share price target

The brokerage has maintained a neutral call on TCS and has raised the target on Tata Group IT major stock by Rs 300 to Rs 4,000.

Tech Mahindra share price target

JPMorgan has retained an underweight rating on Tech Mahindra and has cut the target on the IT stock to Rs 1,050 from Rs 1,150.

HCL Tech share price target

The brokerage has maintained a neutral call on HCL Technologies. JP Morgan has reduced the target on the Noida-headquartered IT company to Rs 1,480 from Rs 1,530.

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