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Home >Markets >Stock Markets >'IT stocks had good run but many have still some steam left.' Top picks

Technology stocks stood as the top performers of 2020. Analysts expect the performance to continue and translate into revenue estimate upgrades. "IT stocks had good run but many have still some steam left. We expect another round of upgrades, albeit marginal, in revenues estimates for FY2022E post- 3QFY21 results," says analysts at Kotak Securities. The brokerage expects Infosys to lead the industry on growth in FY2022E and is their top pick.

"A few stocks are attractive despite the rally. BUY Infosys and Tech Mahindra. Wipro and HCLT are interesting as well," says the brokerage. Kotak Securities lists three main reasons for the growth in IT stocks. The reasons are as below:

The demand drivers are three-fold—(1) workplace management. It is realistic to expect that remote workplaces will continue with great emphasis placed on security, collaboration, scalability and automation, (2) customer experience will become paramount as online becomes the most relevant channel of interaction and (3) the benefits of these changes are best utilized through core transformation.

"We expect Tech Mahindra is play on margin expansion and 5G opportunities at reasonable valuations. Wipro has surprised with the urgency to turnaround effort and can be interesting. HCLT continues to be a strong play on digital foundation deals and long-term growth potential in ERD," says the brokerage.

The biggest technology stocks in terms of market capitalisation, TCS, Infosys, HCL Technologies and Wipro, among the other stocks, ended 2020 at their all time highs.

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