HCL Tech, Persistent Systems among Motilal Oswal's top 4 tech picks with 22% upside potential

economictimes.indiatimes.com:

Motilal Oswal named HCL Technologies, LTIMindtree, Persistent Systems and Coforge as its top picks in the sector.

“Among Tier-I players, we prefer HCLT and LTIM for their strong capabilities in data engineering, ER&D offerings (HCLT) and ERP modernization, making them well-suited for pre-GenAI spending. For Tier-II players, our top picks are PSYS and COFORGE, both poised for strong performance,” said the domestic brokerage firm in its report.

Despite the uncertainties related to the Cigniti integration, Motilal Oswal believes that Coforge is likely to realize cost synergies sooner than expected, which could lead to upside risk to its estimates.

Here is a brief note on the domestic brokerage firm’s top picks:

HCL Technologies: Buy| Target price: Rs 2,200| Upside potential: 21.6%

Motilal Oswal expects HCL to report a flat revenue on QoQ basis and stable trend in TCV while the margins are likely to increase 30bp QoQ due to pyramid gains and the release of some productivity commitments. Further, broad-based growth across geos and verticals, excpt BFSI, is expected owing to State Street divestment. The company is likely to retain its FY25 revenue growth guidance of 3-5%.

LTIMindtree: Buy| Target price: Rs 7,400| Upside potential: 18.4%

LTIM is expected to report 3.0% constant currency growth in 2Q, mainly driven by BFSI (banking) and manufacturing. Manufacturing should perform similarly, while BFSI will benefit from US banking growth. BFS customers are increasing spending on key projects, especially in regulatory