TCS, INFOSYS & HCL TECH PLAN TO BOOST BUSINESS AND CREATE JOBS! - REPORT

The stocks of Indian IT companies- like Tata Consultancy Services (TCS), Infosys, HCL Technologies and Tech Mahindra are set to benefit post the COVID19 outbreak, according to the brokerage Edelweiss. “We believe that the Indian IT Sector will enter a high growth phase with stocks poised to return 20-56% upside and near- term downside risk limited to 10%,” it mentioned in a report dated June 8.

The report further mentions that it will be benefitting from global tech companies like Facebook, Microsoft, Alphabet and Amazon that has seen a rise in digital consumption during the pandemic. “Global Tech companies have always fueled the growth of Indian Players,” it said. Its earnings expectations are expected to rise between 2% to 20%. The target prices are also expected to go up by 25% to 26% across the sector. 

The 200 global companies have made higher allocation of funds towards technology, this in turn is set to benefit Indian outsources. “For instance, Microsoft’s hyper-growth has benefitted Mindtree immensely,” Edelweiss cited in its report. They also highlighted that Microsoft currently contributes to almost 24.8% of Mindtree’s revenue.

Global tech companies have also reiterated that they will either increasing investments or continue to invest on Technology. “We plan to continue to invest in product development and recruit technical talent,” said Facebook CEO Mark Zuckerberg. 

Alphabet, Microsoft and Google’s parent company has also commented on the issue and stated that it will be making a significant investment in “strategic growth opportunities.” Amazon too revealed that It will invest “aggressively” in technology platforms. 

“The onslaught of the coronavirus pandemic has also forced the use of apps and platforms to skyrocket- something that Edelweiss pegs as ‘Techolution’,” Business Insider reported. Tech Giants would increase investments also because a number of people have started working from home and it has led to a sudden explosion of data. Indian IT companies will not only benefit from investments but will also be profiting from cost cuts since work from home has cut down on commute and real estate expenses. 

Nevertheless, companies are exposed to the risk of the country’s GDP crashing, which would affect businesses and could even lead to some clients declaring bankruptcy. “Currency fluctuations and regulatory changes could be additional risks,” the report mentions.