Top IT Stock Picks: Axis Capital Sees Value in These Largecap and Midcap Names
Axis Capital Identifies Strong Opportunities in the IT Sector
According to Axis Capital’s top analysts, the information technology (IT) sector is filled with exciting opportunities, and the organization has identified select largecap and midcap stocks that could outperform in the coming years. Among the top choices is Wipro, a company that has consistently demonstrated strong performance in specific market cycles, such as 2017 and 2021.
Wipro’s Strong Fundamentals
"We believe Wipro has done an phenomenal job in defending its margins despite revenue pressures and the recent move around resetting their capital allocation policy," said Manik Taneja, Executive Director- IT Services & Internet at Axis Capital. "I would say the rate of change for Wipro going into calendar year 2025 is also positive, which is the reason why we put it at the top of our preference order within tier-1 peers."
LTIMindtree: A Mid-Tier Play
Another stock that has caught the attention of Axis Capital is LTIMindtree, which is trading near its historical valuation averages. With expectations of growth acceleration in FY26 and strong deal wins in the latest quarter, the organization sees LTIMindtree as well-positioned for a rebound.
Hexaware Technologies: A Strong Cash Generator
Although Axis Capital does not formally cover Hexaware Technologies, Taneja acknowledged its consistent revenue growth. While Hexaware has lagged behind companies like Persistent Systems and Coforge in terms of growth over the past five years, it has made significant progress in diversifying its revenue base.
Hexaware’s Steady Cash Generation
Hexaware has maintained steady cash generation, partly due to its ownership structure. Given these factors, the company is expected to trade in line with other mid-tier IT firms.
IT Stocks Under Pressure
Despite the sector’s potential, IT stocks have been under pressure, with the Nifty IT Index declining nearly 2.7% on February 24, and down around 10% year-to-date, ending lower in 11 of the last 12 sessions. Concerns over reduced capital expenditure in the US tech sector have raised fears of a potential impact on the NASDAQ, which could also affect Indian IT stocks.
Axis Capital’s Take
"Despite the recent decline, the Nifty IT Index has outperformed the broader Nifty over the past six and twelve months," noted Taneja. Mid-tier IT stocks have seen sharper corrections due to high valuations and weaker-than-expected earnings from global tier-2 tech firms.
Conclusion
In conclusion, Axis Capital’s top IT stock picks, including Wipro, LTIMindtree, and Hexaware Technologies, offer investors a range of opportunities to capitalize on the sector’s potential. With a deep understanding of the IT sector, Axis Capital’s experts have identified these largecap and midcap names as strong candidates for future growth. As the sector continues to evolve, it is essential to stay informed about the latest trends and insights from experts like Manik Taneja. By doing so, investors can make informed decisions and potentially profit from the sector’s growth.
Table: Axis Capital’s Top IT Stock Picks
| Company | Largecap/Midcap | Recent Performance | Growth Expectations | Valuation |
|---|---|---|---|---|
| Wipro | Largecap | Strong Fundamentals | 6-8% | 20-25x |
| LTIMindtree | Midcap | Rebound Expected | 10-15% | 25-30x |
| Hexaware Technologies | Midcap | Steady Cash Generation | 8-12% | 20-25x |
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Additional Resources:
- Infographic: Nifty IT Index Performance
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