“Wipro has done a phenomenal job in terms of defending margins despite revenue pressures and the most recent move around resetting their capital allocation policy. I would say the rate of change for Wipro going into calendar year 2025 is also positive and which is the reason why we put it at the top of our preference order within tier-1 peers,” he added.
The firm also sees potential in mid-tier players like LTIMindtree, which is trading near its historical valuation averages. With expectations of growth acceleration in FY26 and strong deal wins in the latest quarter, Axis Capital sees LTIMindtree as well-positioned for a rebound.
Though 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 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.
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IT stocks has been under pressure, with the Nifty IT Index dropping nearly 2.7% on February 24 and declining 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 NASDAQ, which could also affect Indian IT stocks
Taneja pointed out that despite the recent decline, the Nifty IT Index has outperformed the broader Nifty over the past six and twelve months.
Mid-tier IT stocks have seen sharper corrections due to high valuations and weaker-than-expected earnings from global tier-2 tech firms
Several international IT companies, including EPAM, Globant, and Endava, recently reported earnings. While their overall outlook remains positive, particularly in North America and financial services, concerns about the pace of growth recovery have led to market reactions.
Taneja noted that the key investor concern is not whether companies can maintain or slightly improve profit margins in FY26, but whether they can achieve strong growth acceleration.
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