In its latest strategy note, Antique Stock Broking has advised a 'Hold' rating on leading largecap IT services companies, while expressing a preference for specific midcap stocks within the sector. The brokerage highlights a cautious outlook from US retailers and a significant industry shift towards artificial intelligence (AI) monetization.
Largecap IT Stocks on 'Hold'
Antique has assigned 'Hold' ratings to several prominent largecap IT firms, setting target prices for them:
- TCS: Rs 2,900
- Infosys: Rs 1,390
- HCL Tech: Rs 1,430
- Wipro: Rs 225
- Tech Mahindra (TechM): Rs 1,550
Midcap IT Stocks Recommended for 'Buy'
Conversely, the brokerage sees 'Buy' opportunities in a selection of midcap IT stocks, with the following target prices:
- LTM: Rs 5,625
- Coforge: Rs 1,875
- Mphasis: Rs 3,050
- Cyient - DET: Rs 1,100
- Firstsource: Rs 340
Other midcap stocks, including LTTS (Rs 3,875), Persistent Systems (Rs 5,400), Zensar (Rs 580), and Birlasoft (Rs 355), also received 'Hold' ratings.
Market Commentary and AI's Role
Antique's analysis points to continued caution among US retailers, attributing this to the fading impact of tax refunds and persistent macroeconomic uncertainties, including elevated energy prices and geopolitical risks. The technology landscape is evolving rapidly, with a pronounced focus on deploying AI into production and actively scaling existing AI initiatives.
“The narrative has shifted from experimentation to monetization and operational leverage. Technology and AI are increasingly being positioned as structural margin drivers rather than merely cost centers,” Antique stated in its note.
The brokerage suggests that these developments will have a directionally negative impact on IT services providers and Global Capability Centers (GCCs) over the medium term. This is anticipated as a gradual erosion of traditional services such as application management, support, testing, quality assurance, and reporting, which have historically formed the bedrock of offshore IT services engagements.
Retail Vertical Outlook
Despite the broader caution, the retail vertical demonstrated sequential improvement through FY26, with management commentaries suggesting further recovery in the first half of FY27. Client spending in this sector remains concentrated on digital commerce, supply chain modernization, and AI-led productivity initiatives. However, a broad-based recovery in discretionary spending is expected to be gradual.
The domestic brokerage noted signs of stabilization in the retail vertical, bolstered by improving deal pipelines and increased investments in AI-led transformation. Nevertheless, spending remains selective, with retailers prioritizing cost optimization, vendor consolidation, and automation over general discretionary technology investments. Antique projects the retail vertical to deliver low-to-mid single-digit growth in FY27.