Information technology services has been among the most talked-about sectors in the Indian market over the past few days, driven by sharp swings in sentiment and price action.
On Tuesday the Nifty IT Index slipped nearly 4% to its lowest in about 10 months, highlighting the extent of the pressure on technology stocks. However, the trend seemed to reverse on 25 February, when Indian IT stocks staged a strong rebound. The Nifty IT index gained over 2%, after an overnight rally in global tech stocks, as Wall Street benchmarks advanced following weeks of volatility sparked by fears around artificial intelligence-led disruption.
Investor sentiment improved after Anthropic announced plans to build partnerships around its Claude AI chatbot, easing concerns that AI tools could replace existing business models rather than work alongside them.
With sentiment around IT stocks improving, here are four IT stocks in India to watch. All of them have debt-to-equity ratios below 1, a five-year average return on equity (ROE) and return on capital employed (ROCE) above 15%, and positive five-year compound annual revenue growth. They are sorted by market cap.
#1 TCS
Tata Consultancy Services is the flagship company of the Tata group. It is an IT services, consulting and business solutions organisation, having partnered with many of the world’s largest businesses over the past 57 years.
With a global presence and deep domain expertise across multiple industry verticals, TCS offers a comprehensive portfolio of application development and management, digital transformation, AI, data and cloud services, engineering services, cognitive business operations, cyber security, and products & platforms – targeting every C-suite stakeholder.
It has a large global footprint, with operations across six continents and a workforce representing 152 nationalities. Its geographic presence spans North America, Latin America, the UK, Continental Europe, Asia Pacific, India, and the Middle East & Africa, underlining its diversified revenue base and global delivery capabilities.
According to its FY25 annual report, TCS became the second global IT services brand to cross $20 billion in brand value, coming in at $21.3 billion, according to Brand Finance. The company’s brand value has grown by 826% since 2010, highlighting its leadership position in the global IT services industry.
Over the past five years the company’s revenue has clocked a compound annual growth rate (CAGR) of 10.2%, and net profit a CAGR of 8.5%. The five-year average ROE and ROCE stand at 46% and 62.6%.
#2 Infosys
Infosys is a global leader in next-generation digital services and consulting, with a strong focus on delivering AI, cloud, and other digital solutions across industry verticals in more than 59 countries. It enables companies with an AI-first foundation while scaling enterprise AI, cloud, and digital technologies to deliver better performance and customer experience. Infosys pioneered the global delivery model and was the first Indian IT company to be listed on the Nasdaq, marking a key milestone in India’s IT services industry.
Over the past five years the company’s revenue clocked a CAGR of 12.4% and net profit a CAGR of 10%. The five-year average ROE and ROCE stand at 29.2% and 40.6%.
The company is now prioritising an AI-first strategy to support clients in their transition to artificial intelligence. Agentic AI has become central to its client engagements, with Infosys seeing a strong business case for improving operational efficiency and customer outcomes.
It also continues to strengthen its cloud capabilities, with an increased focus on cloud advisory, data on cloud, cloud security, SaaS, PaaS, IaaS, and private cloud solutions, positioning the company for sustained growth.
#3 HCL Tech
HCL Tech a global technology company offering industry-leading capabilities centred around AI, digital, engineering, cloud and software, powered by a broad portfolio of technology services and products.
The company works with clients across all major verticals, providing industry solutions for financial services, manufacturing, life sciences and healthcare, high tech, semiconductors, telecom and media, retail and CPG, mobility, and public services. It is a strategic partner to around half of Fortune Global 500 companies and 40% of Global 2000 enterprises.
Its enterprise software business is valued around $1.4 billion and comprises more than 70 products across multiple technology domains. Its delivery capabilities are supported by over 220 global delivery centres spread across 60 countries.
Over the past five years the company’s revenue has clocked a CAGR of 10.6%, while net profit has clocked 9.5%. The five-year average ROE and ROCE stand at 22.3% and 29.3%, respectively.
HCL Tech plans to continue developing market-ready solutions and offerings aimed at setting new industry standards. It also plans to enhance its AI Force Agentic Tech platform by integrating service level management (SLM) for IT operations, enabling a more efficient, scalable, and outcome-driven delivery model.
#4 Wipro
Wipro is a leading global end-to-end IT transformation, consulting, and business process services provider, with decades of experience as a pioneer in the Indian market. It leverages applications, cognitive computing, hyper-automation, robotics, cloud, analytics, and other emerging technologies to deliver comprehensive technology-led solutions.
Its broad IT services portfolio spans digital, analytics, consulting, systems integration, application development and maintenance, technology infrastructure services, package implementation, R&D services, and more. With a global workforce of over 230,000 professionals across 65 countries, the company maintains a strong international delivery network.
Over the past five years the company’s revenue has clocked a CAGR of 25.%, while net profit has clocked 16.3%. The five-year average ROE and ROCE stand at 12.7 and 17.8%.
The company seeks to deepen relationships with existing clients by expanding the range and complexity of services offered, aiming to drive a higher wallet share and long-term growth.
Conclusion
According to India Brand Equity Foundation, India’s technology industry is on track to double its revenue to around ₹43.1 trillion ($500 billion) by 2030, underscoring the sector’s long-term growth potential.
Rising demand for AI-led solutions, cloud modernisation, and the rapid expansion of global capability centres (GCCs) are expected to be key growth drivers. The wide adoption of cloud services, cybersecurity, and analytics also continues to provide structural support, which could bolster the performance of Indian IT stocks over the long term.
However, you should always evaluate a company's fundamentals, corporate governance, and stock valuations before making an investment decision.
Happy investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com