IT Stocks to Buy Now in India 2024
Portfolio Companies in IT Stocks
Tata Consultancy Services Ltd
Tata Consultancy Services Ltd is the largest IT company in India by Market cap and the world’s largest IT Services provider. The company is involved in providing a wide spectrum of services such as IT Services, Consultancy, business solutions, digital transformation, and IT products and platforms. The company is also foraying into newfound and developing technologies such as cloud-based computing, machine learning, AI and Blockchain-based technology. As of Q2FY24, its majority revenue segment is BFSI which forms 38% of the total revenue pie for the company followed by Retail and CPG, Communications, Media and Tech, Life Sciences and Healthcare, Manufacturing, and others. TCS’ major revenue generation is from North America contributing to about 52%, UK and Europe ex-UK are around 31.3% while India is at 5%.
The company has a proven track record which is reflected in the company’s financials as it has been delivering industry leading results such as 5-year average RoE of 41%; an operating profit margin of 26%. TCS has also seen consistent growth with revenue growing at a CAGR of 13% over the last 5 years while the net profits saw a 10% CAGR for the same period.
A key risk for the company lies in the fact that the company may not be able to deliver growth at a similar pace as in the past, thereby taking away the premium valuations the stock commands and impacting the share price negatively.
Infosys Ltd
Infosys Ltd is currently the 2nd largest IT service provider in India. The company is engaged in providing a wide array of IT services to clients across the globe and across multiple verticals such as the US, Europe, Asia and the rest of the world. The company is also engaged in the development of new technologies to better service clients. The verticals it serves are BFSI, Retail & CPG, Communications, Energy & Utilities, Manufacturing and Hi-tech. The geographical breakdown spans across North America, Europe and India and the rest of the world.
. The company has delivered a strong financial performance with a 5-year average ROE 28% while managing to deliver an Operating profit margin of 24%. It has delivered a 16% CAGR growth in the top line and a 9% CAGR growth in the bottom line the last 5 years. The company currently has a P/E ratio of 22.86x, being relatively under valued among its peers. Infosys faces risks from whistle-blowers. In the past, it has been successful in allaying any concerns but multiple claims may still harm their reputation.
HCL Tech
HCL Tech is a leading global IT Services company. It is ranked among the top five Indian IT services companies in terms of revenue. The company has been focused on transformational outsourcing since its entry into the global market following its IPO in 1999. The company’s revenue grew by 13.7% in constant currency terms in FY23. The growth in IT services has been the fastest in the past five years. The company has been experiencing good demand from AWS and thus has been hiring aggressively in this segment. The company has also seen consistent growth with revenue growing at a CAGR of 15% over the last 5 years while the net profits saw an 11% CAGR for the same period. The company’s margins are improving and its growth coming in line with its top peers. The company also provides an attractive dividend yield of 3.9%. Considering the beaten-down valuations, future growth and margin expansion provide a strong case for the stock.
Larsen & Toubro Technology Services Ltd
Larsen & Toubro Technology Services Ltd is a market leader in five key segments: transportation, telecom and hi-tech, industrial products, plant engineering, and medical devices. LTTS is positioned to leverage and capitalize on the emerging opportunities arising from Electric Autonomous and Connected Vehicles, 5G, AI and Digital Products, Digital Manufacturing, Medtech and Sustainability.
The company has a robust financial profile and a debt-free balance sheet, with net cash flow of Rs. 290 crores as of March 31, 2023. During FY23, it registered revenue of Rs 80,136 million, a growth of 22% Y-o-Y, and a Net profit of Rs 11,698 million, a growth of 22% Y-o-Y. The company has a strong track record of return on equity (ROE) and return on capital employed (ROCE) with an average of 26% and 35.70% over the last 5 years.
Persistent
Persistent was able to produce 14.1% YoY growth in CC during Q2FY24. This growth was fueled by new business wins with both old and new clients. Persistent showcased several Gen AI customer stories, highlighting their expertise in generative AI technology. The order book for Q2FY24 was $479.3 million, with a new order book TCV of $313.1 million. The top 50 customers portfolio delivered 3.7% growth, better than the overall revenue growth of the company. The company’s numerous long-term partnerships with well-known global brands have increased its commercial stability and offered long-term visibility. The company will be able to deliver a higher growth trajectory than its competitors thanks to a solid deal pipeline and strong revenue growth momentum in the Services vertical as well as in Allied businesses.
In order to get an exposure to best Indian IT stocks, you would need a total of approximately ₹37,055 for the below curated portfolio as of 28th Mar 2024.
READ MORE NEWS ABOUT BUISNESS
Jio Financial Services plans for Rs 36000 crore deal with Re (kuckad.com)
FOLLOW ME wakeup_ashish (@Ashish__shandil) / X
