Stocks To Buy: Motilal Oswal upgrades three IT stocks, projects up to 67% upside on 'enticing setup'

Brokerage firm Motilal Oswal has upgraded three IT services companies, Infosys Ltd., Mphasis Ltd. and Zensar Technologies Ltd. to a "buy" rating, while upgrading Wipro to "neutral", in its latest note on Monday, November 24. Based on revised price targets, the brokerage has the highest upside potential of as high as 67% for its "buy" recommendations.

For Infosys, Motilal Oswal has upgraded the stock to a "buy" rating, and its revised price target of ₹2,150 implies a potential upside of 39% from current levels.

Mphasis has also been upgraded by Motilal Oswal to a "buy" rating, and its price target of ₹4,100 implying a potential upside of 49% from current levels.

Zensar Technologies' shares could rise another 48% from current levels, according to Motilal Oswal's upgrade and revised price target of ₹1,068.

Stock	Earlier Rating	New Rating	Target (₹)	Upside (%)
Infosys	Neutral	Buy	2,150	39
Mphasis	Neutral	Buy	4,100	49
Zensar	Neutral	Buy	1,050	48
Wipro	Sell	Neutral	275	13

Within Motilal Oswal's coverage, Coforge has the highest upside potential of 67% from current levels. Its "buy" rating comes with a price target of ₹3,000.

Motilal Oswal wrote in its note that while the share of IT Services in the Nifty 50 profits has remained stable at 15% in the last four years, its weightage in the benchmark index is now at a "decadal low" of 10%, compared to the December 2021 peak of 19%.

"This presents an enticing opportunity. Our analysis suggests outsized gains if this plays out, while current levels already bake in the status quo of Gen-AI led deflation, and demand apathy," the Motilal Oswal note said.

Similar to the cloud build-out phase between 2016-2018, the store, compute and infra layer are now in place, and while capex may still continue, Motilal Oswal expects incremental spends on AI and services to pick-up.

The brokerage believes that the bottom is here and the risks are skewed to the upside. It has upgraded its growth estimates to factor in this growth recovery, which will start reflecting in growth rates from the second half of financial year 2027 and take full shape in financial year 2028 as enterprises will enter full-scale AI deployment.

Therefore, Motilal Oswal has upgraded price targets and multiples by up to 20% and also rolled over the price targets to the financial year 2028 Earnings Per Share (EPS).

The Nifty IT index has risen 2.5% in the last one month, but has remained an underperformer so far, declining 15% so far year-to-date.