Axis Securities identified four IT services stocks as its ‘Top Conviction Ideas’ with a ‘Buy’ rating for February 2026. This came after the IT stocks saw a massive rout globally. 

The brokerage said that the IT services industry is experiencing an improving growth trajectory with “green shoots” becoming visible, despite a demand environment impacted by seasonal weakness and new labour law codes. 

Here are the four Top Conviction Ideas on IT by Axis Securities:

  • Persistent Systems: Target price of Rs 7,170. This implies upside of 31%
  • Coforge: Target price of Rs 2,300. This implies upside of 69.2%

There are several factors driving the choice of these stocks,  like customers adding Artificial Intelligence in discretionary spending, steady operations, resilient deals, etc. 

Vertical leadership and the AI lever

As per the brokerage, BFSI and Healthcare continue to be the primary verticals driving growth for the IT software service companies, while AI has emerged as a critical cross-vertical lever. Clients are increasingly integrating AI into their discretionary spending decisions, focusing on vendor consolidation and cost-optimisation deals.

Steady operating margins

Operating margins have remained steady on a sequential basis. While companies face cost pressures from wage hikes and subcontracting, these are being mitigated by currency tailwinds, AI-driven automation, and disciplined cost-optimisation programs, said Axis Bank.

Resilient deal wins

Demand for emerging technologies like Cloud Transformation, Data Analytics, and IoT remains robust, leading to resilient deal wins across the sector. Several companies reported record-high deal closures, providing stronger revenue visibility for the long term.

Overall,  while the short-term macro environment remains stable and cautious, the long-term outlook for the Indian IT services industry is robust. The brokerage expects that mid-cap players will continue to outperform, while large-cap players will see continued sequential earnings growth.