Due to the increasing demand for cloud services after COVID-19, the demand for IT service providers has increased significantly. In view of the growth in the revenue of these companies, Goldman Sachs has given BUY rating to the shares of Infosys and TCS. At the same time, Mindtree has been given a rating of Sell. Analysts believe that rising demand for IT services has benefited Indian companies so far and they are expected to do well going forward. Goldman Sachs has cited pre and post COVID cloud forecasts. It states that in 2021, 2022, 2023 and 2024, Infrastructure-As-a-Service (IaaS) will grow by 33, 30, 39 and 48 percent respectively.
Goldman Sachs has cited this report as saying that cloud adoption and digitization is due to collaboration tools, ways to increase virtual sales across industry verticals, high-end automation tools due to work from home and increased remote working for white collar jobs across the world. The pace has increased. This will greatly benefit companies like TCS and Infosys. According to Gartner, spending on IT services acquired through outsourcing will grow at a rate of 8.6 per cent during 2020-25. In such a situation, good gains can be seen in the shares of TCS and Infosys.
Infosys
Rating- BUY
Target Price – Rs 2117
Goldman Sachs remains bullish on this stock. It says that it can prove to be the fastest growing large cap IT company in 2021-22. Its revenue growth can be 18 percent. Company sales are strong. Its marketing team is also doing well for digital products. According to the estimates of Goldman Sachs, its shares can increase by more than 25 from the current level.
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TCS
Rating – BUY
Target Price – Rs 4,578
Goldman Sachs is also bullish on TCS shares. The brokerage firm has said that there are many reasons due to which the market share of the country’s largest IT company will increase. The company has strong domain experience. Contextual knowledge, a large scope of digital capability, its reach in different countries and verticals will play an important role in strengthening its growth. The scope of the company’s service is very wide. Due to this, it helps in bagging big deals and vendor consolidation. This company looks undervalued in Price to Book Ratio (P/B) vs ROE. Goldman Sachs has said that its stock can increase by 21.4 percent from the current price. Its target price is Rs 4,578.
(Article: Kshitij Bhargava)
(The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)
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