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Nirmal Bang Report
As Q4 FY26 earnings draw closer, domestic brokerage Nirmal Bang has identified a mix of large‑ and mid‑cap IT stocks to Buy and Hold ahead of the March‑quarter results.
The brokerage see TCS, Infosys, and HCLTech emerging as structurally advantaged across CORE, supported by client depth, improving productivity, and financial flexibility.
Infosys- Upside Up to 34%
Why Nirmal Bang likes Infosys
Infosys Ltd. has very strong fundamentals with ~Rs 19,900 crore cash and zero debt implying a strong balance sheet. It has exhibited strong cash conversion with average ~100% FCF/PAT ratio for the past six years. In terms of Ebit margins, it is only second to TCS, while outpacing TCS in revenue growth; we believe in the short-to-medium term it can maintain Ebit margins between 21 and 22%.
In the last few quarters there has been a strong uptick in large and mega deals (9M FY26 net-new TCV is +40% YoY and 9M FY26 total TCV is +30% YoY) ensuring revenue visibility for the next couple of years as 9M FY26 deal signings are already above FY25 total deal signings.
While Infosys has not taken on any large investment commitments, it leaves enough room to expand faster inorganically, especially at the time when technology is changing quickly and developing internal capabilities may take longer.
Nirmal Bang Re-Initiates Coverage
The brokerage has reinitiated coverage on Infosys with a ‘Buy' recommendation, and target price of Rs 1,746 valuing it at 21x FY28E EPS based on its long term risk and fundamental analysis.
The brokerage's estimates are assuming US$ revenue and EPS CAGR of 5% and 8.8% over FY26-FY28E. it has cut estimates considering a two-sided risk in FY26E-FY28E earnings growth.
Nirmal Bang expects stable margin profile and healthy cash flows in the short term and long-term leadership based on the CORE principles; it also has a high margin of safety during times of high volatility with a diversified portfolio.
Valuations have also become lucrative at ~30% below the 10- year mean of 21x.
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