- Nuvama sees IT sector downturn as a buying opportunity amid sharp valuation corrections
- Indian IT market faces no existential threat from Generative AI, says Nuvama
- Top ten Indian IT firms including Infosys, Wipro, Coforge receive 'buy' calls
At a time when the IT sector has faced an immense downturn due to AI-related pressures and emerging conflict in the Middle East, Nuvama has come out with a highly bullish note in the industry, adding that the sharp correction has made valuations highly attractive.
Quoting Mark Twain, Nuvama points out that the death of the IT sector has been highly exaggerated and has given out buy calls on all the top ten IT companies in India, including the likes of Infosys, Wipro and Coforge.
The note has added that the Indian IT space faces no existential threat from Generative AI and that the industry's total addressable market is set to increase, even though the near-term volatility is set to persist.
The brokerage firm adds that the recent price corrections is a major investment opportunity despite Gen-AI-led disruption, with most large-cap stocks now trading below their last 15 years' average. Moreover, midcaps are trading close to 1x PEG multiple, a near-bottom multiple.
Nuvama has particularly highlighted Coforge - its top pick - noting that the price correction has been so sharp that the current market price suggests zero terminal growth rate.
The updated Nuvama target prices on these top ten IT companies are as follows.
- Coforge: New price target of Rs 2100, implying a potential 84% upside from current levels.
- Mphasis: Target raised to Rs 3100, suggesting a 42% upside.
- LTIMindtree: New target set at Rs 6100, indicating about 41% upside.
- TCS: Price target of Rs 3300, translating to roughly 31% upside.
- Persistent Systems: Target placed at Rs 6000, offering around 26% upside.
- Infosys: New price target of Rs 1650, implying 27% upside.
- Tech Mahindra: Target of Rs 1650, indicating about 24% upside.
- Hexaware: Price target set at Rs 550, suggesting 24% upside.
- Wipro: Target of Rs 240, implying around 21% upside.
- HCL Tech: New target of Rs 1550, indicating 14% upside potential.
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