Sharekhan expects spending on digital transformation and cloud technologies by companies will remain strong in FY22 on the back of emergence of new business models, investments on enhancement of customer experiences, core modernisation, and efficiency initiatives. However, key risks are rupee appreciation, weaker macros including a potential for slower GDP growth in the US and Europe, and delay in pipeline conversion, it added. Here are the top picks from the IT stocks by Sharekhan:
2/11
Infosys | Rating: Buy | LTP: Rs 1,497 | Target: Rs 1,650 | Upside: 10 percent. Sharekhan tweaked its earnings estimates for FY2022E/FY2023, factoring in the next round of wage hike from Q2FY2022 and return of travel expenses from H2FY2022.
3/11
TCS | Rating: Buy | LTP: Rs 3,320 | Target: Rs 3,750 | Upside: 13 percent. Broking house upgraded our earnings estimates for FY2022E/FY2023E, given strong exit in Q4FY2021, robust deal wins and strong demand environment.
4/11
Wipro | Rating: Buy | LTP: Rs 559 | Target: Rs 610 | Upside: 9 percent. Broking firm has raised earnings estimates for FY2022E/ FY2023E, factoring in strong deal wins, better than-expected Q1FY2022 revenue growth guidance, and change in USD/INR exchange rates.
HCL Technologies | Rating: Buy | LTP: Rs 986 | Target: Rs 1,200| Upside: 21 percent. Sharekhan tweaked earnings estimates for FY2022E/FY2023E, to factor in the lag in headline estimates, lower-than-expected EBIT margin guidance, retirement of a couple of products and strong deal wins.
6/11
Tech Mahindra | Rating: Buy | LTP: Rs 1,080 | Target: Rs 1,150 | Upside: 6 percent. Sharekhan has broadly maintained our earnings estimates for FY2022E/FY2023E, factoring in impressive margin performance in Q4FY2021 and mega-deal momentum.
7/11
L&T Infotech | Rating: Buy | LTP: Rs 4,167 | Target: Rs 4,800 | Upside: 15 percent. Broking house fine-tuned its earnings estimates for FY2022E/FY2023E, factoring in beat in operating profit margin in Q4FY2021, increasing F-500 client base, and healthy deal pipeline, while wage revision in Q1FY2022 and investments on building capabilities would impact its operating profitability.
8/11
L&T Technology | Rating: Buy | LTP: Rs 2,808 | Target: Rs 3,100 | Upside: 10 percent. Broking firm fine-tuned its earnings estimates for FY2022E/FY2023E factoring in lower-than expected revenue guidance for FY2022 and beat in margins in Q4FY2021 and reset in USD/INR rates.
Mastek | Rating: Buy | LTP: Rs 2,167 | Target: Rs 2,400 | Upside: 10 percent. Sharekhan raised its earnings estimates for FY2022E/ FY2023E on account of strong beat in revenue and margin in Q4FY2021, strong deal wins, and strong outlook for Evosys business.
10/11
Birlasoft | Rating: Buy | LTP: Rs 400 | Target: Rs 450 | Upside: 12 percent. Broking firm raised earnings estimates for FY2022E/FY2023E on account of impressive margin performance in Q4FY2021, strong deal wins, improving annuity revenue, and sharpening focus on top 30 accounts.
11/11
Intellect Design | Rating: Buy | LTP: Rs 764 | Target: Rs 900 | Upside: 17 percent. Sharekhan fine-tuned its earnings estimates for FY2022E/FY2023E, factoring in missed margin estimates in Q4FY2021, while management commentary remained optimistic on sustained growth momentum and improvement in profitability with the change in revenue mix.
