BofA Securities has initiated coverage on select midcap information technology stocks, saying future returns in the segment will be driven by progress in artificial intelligence strategies, balance sheet discipline and scalability supported by sustainable competitive moats.
The brokerage’s initiation comes at a time when the Nifty IT index has been under pressure amid concerns that artificial intelligence-led disruption could trigger a prolonged selloff in the sector. The combined weight of five information technology companies in the NSE Nifty 50 index has also fallen below 7.6 per cent, the lowest level since at least 2002, according to Bloomberg data.
Coforge emerges as top pick
BofA Securities assigned a buy rating for Coforge at a target price of ₹1,725. The brokerage cited the company’s well-rounded profile, highlighting strong sales momentum, disciplined execution, mergers and acquisitions track record as key strengths supporting its positive stance.
The brokerage assigned a neutral rating to Mphasis with a target price of ₹2,440. The brokerage said it expects the company to remain in a “show-me” phase over the next six to 12 months.
It initiated coverage on Persistent Systems with an underperform rating and a target price of ₹4,875.
LTM (LTIMindtree) was also rated underperform with a target price of ₹3,910. According to BofA Securities, the stock requires fresh growth triggers to justify its current valuation levels.