3 IT Stocks To Buy For Good Returns As Recommended By This Brokerage House

Emkay Global has recently come-up with a report on the IT sector. We have picked some stocks from its report, which have a buy recommendation on stocks from the IT sector.

"We expect 4.2% QoQ growth in USD revenue with cross-currency headwinds of 50 basis points. We expect 3% growth in Communications and 5% growth in the Enterprise business. Expect EBIT margins to decline marginally by 10bps sequentially due to supply-side challenges," the brokerage has said.

Buy Tech Mahindra stock

Emkay Global sees an upside of nearly 24% on the stock of Tech Mahindra and has set a target price of Rs 1,700 on the stock, with a buy recommendation.

"We expect 4.2% QoQ growth in USD revenue with cross-currency headwinds of 50 basis points. We expect 3% growth in Communications and 5% growth in the Enterprise business. Expect EBIT margins to decline marginally by 10 basis points sequentially due to supply-side challenges. Key things to watch out for: 1) Communications and Enterprise business outlook, 2) update on 5G-related technology spending uptick, 3) performance of the BPO business, 4) FY22 revenue growth and margin outlook, 5) attrition, and 6) deal intake during the quarter, deal pipeline and deal closure momentum," the brokerage has said.

Birlasoft Ltd

Emkay Global also sees an upside of approximate 24% on the stock of Birlasoft Ltd and has set a target price of Rs 500, as against the current market price of Rs 409.

"We expect 5.3% QoQ USD revenue growth after considering 20 basis points cross-currency headwinds. EBIT margins are expected to decline by 110 basis points due to wage hikes and supply-side challenges. We expect net profits to decline 6.4% sequentially. Key things to watch out for: 1) order wins during the quarter and deal pipeline, 2) outlook on revenue and margin trends through FY22, 3) outlook for key industries like Manufacturing, Life Sciences, BFSI, and E&U, 4) attrition and steps taken to manage supply-side challenges," the brokerage has said in the IT report.

Route Mobile

The brokerage also has a buy call on the stock of Route Mobile with a price target of 19% on the stock to a target price of Rs 2,420.

We expect revenue to grow 14.9% QoQ on recovery in volume and benefits accruing from the rate increase in ILD messages. Recovery in revenue growth momentum and better realization to drive 130bps margin expansion sequentially. Key monitorables: 1) Impact on revenues and margins due to the price hikes on SMS charges for global companies by telcos, 2) traction in demand for new products, 3) update made on developer program, 4) RCS traffic monetization plan," the brokerage has said.

Disclaimer

The investment ideas are picked from the brokerage report of Emkal Global. Investors should note that investing in stocks is risky and neither the author, nor Greynium Information Technologies Pvt Ltd, nor the brokerage would be responsible for losses based on a decision from the above article.