Jefferies tells investors it sees potential for further valuation gains in a few Indian IT stocks, even after the sector’s sharp October rally. The brokerage says share prices still largely reflect weak long-term growth expectations, creating room for selective “rerating” as sentiment potentially improves.
In its view, Infosys and TCS are the only large IT companies with meaningful re-rating potential, while Sagility stands out among mid-sized firms. Jefferies highlights a muted sector revenue growth outlook for FY26-29, but argues that a lack of additional negative growth surprises could still support valuation changes. It also notes that sentiment could be affected if global AI capital spending worsens.
Jefferies raises target prices for Infosys and TCS, while keeping ratings at “hold” for Infosys and “underperform” for TCS. It frames valuation risk around scenarios for growth through FY29, with an estimated downside outcome corresponding to lower P/E levels and a best-case scenario corresponding to higher P/E ranges for large and mid-sized companies.
