Business · Markets · 2 hrs ago
Jefferies sees valuation upside for Infosys, TCS and Sagility
Jefferies sees more room for some Indian IT stocks to gain value even after the sector’s sharp October rally.
It named Infosys and TCS among large companies with potential for a valuation rise, and Sagility among mid-sized firms.
The brokerage remains cautious because it expects muted sector revenue growth over FY26-29.
It raised its target prices for Infosys and TCS by 14-18%, to ₹1,160 and ₹2,125, while keeping its hold rating on Infosys and underperform rating on TCS.
Jefferies said the risk-reward becomes unfavourable above 17-18 times earnings, a measure comparing a share price with company profits.
It sees possible price-to-earnings ratios of 15-22 times for large firms and 22-47 times for mid-sized firms if long-term growth continues at its FY21-26 pace; with no growth beyond FY29, it estimates 12-13 times.
The outlook could change if global spending on artificial intelligence weakens sentiment, but Jefferies says a lack of further negative growth surprises may support a rerating.
Jefferies sees potential for further valuation gains in Infosys and TCS among large Indian IT companies, and in Sagility among mid-sized firms.
The brokerage says share prices still reflect weak long-term growth expectations despite a sharp October rally.
It remains cautious about sector growth and says the risk-reward becomes unfavourable beyond 17-18 times earnings.
Jefferies raised its target prices for Infosys and TCS by 14-18%, while keeping its hold rating on Infosys and underperform rating on TCS.
- Who
- Jefferies, a brokerage.
- What
- It sees scope for further valuation gains in Infosys, TCS and Sagility, and raised its target prices for Infosys and TCS.
- When
- October 22, 2026.
- Where
- Indian IT stocks; the article is datelined Mumbai.
- Why
- Share prices still reflect weak long-term growth expectations, and a lack of further negative growth surprises could support a rerating.
This story does not have two clearly opposing sides.
This story does not have a timeline yet.
- Infosys target price
- ₹1,160, raised by 14-18%
- TCS target price
- ₹2,125, raised by 14-18%
- Infosys rating
- Hold
- TCS rating
- Underperform
- Risk-reward threshold
- Unfavourable beyond 17-18 times earnings
What people are saying
Whilst the revenue growth outlook for the sector remains muted over FY26-29, a lack of incremental negative surprises on growth, amid potentially worsening sentiment on global AI capex, may drive a rerating in IT stocks
Maintaining the long-term revenue growth trajectory in line with the growth seen over FY21-26 is the best case in our view