9 Tech & IT Stocks On Emkay's “Buy” List Ahead Of Quarterly Numbers

Emkay Global has released its latest report on the IT sector, ahead of quarterly numbers. Here are 9 tech and IT related stocks on Emkay Global's "Buy" list.

Revenue growth likely to moderate

According to Emkay Global, revenue growth momentum is likely to moderate in Q3 due to furloughs, lower number of working days, deferred spending by few clients, and increased cautiousness among clients amid macro uncertainties. "We expect revenue growth of 0.8-3.7% CC QoQ for Tier-1 companies and of -0.4% to 3.4% for mid-cap companies. Except for LTIM, EBITM is expected to expand by 20-100bps QoQ for Tier-1 companies and 20-50bps for mid-cap companies on account of flattening employee pyramid, optimization in subcontracting costs, operating efficiencies, and rupee depreciation," Emkay global has said.

Infosys and HCL Tech to retain their guidance

According to Emkay Global, Infosys and HCL Tech will retain their guidance of 15-16% CC YoY revenue growth/21-22% EBITM and 13.5-14.5% CC revenue growth/18-19% EBITM for FY23, respectively. "Wipro is expected to guide for 1-3% CC QoQ revenue growth for Q4. Nifty IT index gained ~6% in the last 3M, largely in line with the broader market indices. Risks of recession and potential cut in FY24 revenue remain; however, margin resilience and weak rupee would limit earnings cut. We roll forward our TP to Dec-23 across our coverage universe. Our pecking order is WPRO, INFO, TECHM, HCLT, and TCS among Tier-1 players, and Zomato, MPHL, BSOFT, FSOL, and PSYS among mid-caps," the brokerage has said.

Stocks to buy from the IT Space according to Emkay Global

Name	Rating	Target price
Infosys	Buy	1700
Wipro	Buy	470
HCL Tech	Buy	1100
TECH Mahindra	Buy	1120
Mphasis	Buy	2500
Perisistent	Buy	4125
Birla Soft	Buy	380
First Solutions	Buy	125
Zomato	Buy	90

Seasonal factors and macro uncertainties to weigh on growth

We expect revenue growth momentum to moderate in Q3 on account of furloughs, lower number of working days, deferred spending by few clients, and increased cautiousness among clients amid macro uncertainties and high inflationary environment. Within our coverage, we expect CC revenue growth of 0.8% to 3.7% for tier-1 companies (cross-currency impact of 20-50bps on reported USD revenue) and of -0.4% to 3.4% for mid-cap firms (cross-currency impact of 10-30bps on reported USD revenue). We expect the usual seasonality in H2 growth to be amplified by slower decision making and weak discretionary spending due to macro uncertainties. We expect INFO to retain its 15-16% CC revenue growth and 21-22% EBITM for FY23. HCL Technologies is also likely to retain its 13.5-14.5% CC revenue growth and 18-19% EBITM guidance," the brokerage has said.

Disclaimer

The stocks have been picked from the brokerage report of Emkay Global. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.