The adoption of Generative AI (GenAI) does not possess any existential threat to the Indian IT services industry, while the recent sharp correction in the IT stocks has made valuations highly appealing, according to Nuvama Institutional Equities.
The brokerage firm remains positive on the Indian IT sector from a medium to long-term perspective, although it believes near-term volatility may persist.
Nuvama quoted Mark Twain who once said “reports of my death are greatly exaggerated” as the current state of the Indian IT industry.
“We see no existential threat from Gen-AI, as we believe the requirement for a system integrator — which can customise an enterprise’ plug-and-play software’s input and output as per its requirements—shall always exist,” Nuvama said.
It also noted that B2B adoption of any technology is very different from that of the B2C segment. Eventually, enterprises going for automation of tasks shall still need someone to take ownership of the system — and that will be IT Services firms.
Indian IT stocks have undergone massive value erosion over the last few months amid affecting the long-term business model of sectoral companies. The Nifty IT index has plunged 21% since the beginning of the year, with large-cap IT stocks falling 20% and midcaps correcting 25% over the same period.
The correction has occurred despite a reasonable performance in Q3FY26 and an improving outlook, as demonstrated by strong deal-wins, Nuvama said.
As a result of this correction, most large-cap are now trading below their last 15 year’s average — some very close to the bottom multiple of the same period. Midcaps IT stocks are trading close to 1x PEG multiple, a near-bottom multiple, according to Nuvama.
The sharp correction over the last two months has made valuations highly attractive, said the brokerage firm, which now has a ‘Buy’ call on all the top-ten IT stocks.
IT Stocks to Buy
Nuvama upgraded its rating on , Wipro, Tech Mahindra and Hexaware Technologies to ‘Buy’. It prefers , LTIMindtree, Persistent Systems, , Infosys and (TCS).
The rating on HCL Technologies has been upgraded to ‘Buy’ from ‘Hold’, but its target price has been slashed to ₹1,550 from ₹1,700 earlier. Nuvama has also upgraded its rating on to ‘Buy’ from ‘Hold’ and cut its target price to ₹240 from ₹255.
Hexaware Technologies’ ratings has been upgraded to ‘Buy’, while its target price has been reduced to ₹550 from ₹690 earlier. ’s rating has been upgraded to ‘Buy’ from ‘Hold’ with an unchanged price target of ₹1,650.
TCS share price target has been slashed to ₹3,300 from ₹3,750 earlier, Infosys share price target has been cut to ₹1,650 from ₹1,900, and share price target has been cut to ₹6,100 from ₹7,750.
Nuvama also reduced Coforge share price target to ₹2,100 from ₹2,500 earlier, Persistent Systems share price target to ₹6,000 from ₹7,700, and Mphasis share price target to ₹3,100 from ₹3,400 earlier, while maintaining a ‘Buy’ call on all these IT stocks.
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