The Indian technology sector, a key driver of economic growth, has faced increasing concerns about the potential impact of a global recession. Major players like TCS, Persistent Systems, and HCL, known for their strong presence in IT services and digital transformation, are navigating these uncertain times.
Analysts are closely watching how these companies are positioned to weather the storm, with expectations around their adaptability, revenue streams, and future growth strategies in the face of recession fears.
Experts Overview
According to CLSA, Generative Artificial Intelligence (AI) holds significant potential to transform human lives and is expected to drive the next wave of technological innovation. This presents a major opportunity for Indian IT services companies to capitalize on. CLSA also suggests that data cloud, cybersecurity, SaaS, and automation will be key drivers of growth in the sector.
Their analysis is based on a proprietary framework that assesses the total addressable market, revenue potential, productivity improvements, use cases, and implementation strategies. CLSA has shared its outlook on top picks in the Indian IT sector, highlighting Persistent Systems as a ‘high-conviction outperform’ stock, while TCS is rated as ‘outperform’.
1. Tata Consultancy Services Ltd
Tata Consultancy Services Ltd, with a market capitalization of Rs.12.68 lakh crore, is currently trading at Rs.3,499.50 per share on Thursday, reflecting a 0.2 percent decline from its previous close. CLSA has assigned an “overweight” rating to TCS, setting a target price of Rs.4,546 per share, which implies a potential upside of 30 percent.
TCS is well-positioned to leverage the growing potential of Generative AI, with its strong focus on digital transformation and cutting-edge technologies. The company is investing heavily in AI research and development to enhance its offerings across industries.
TCS is also integrating AI-driven solutions into its services, enabling clients to streamline operations and drive innovation. As a result, analysts remain optimistic about TCS’s ability to outperform in the face of recession concerns, given its deep expertise in AI, cloud computing, and automation.
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2. Persistent Systems
Persistent Systems Ltd, with a market capitalization of Rs.79,118 crore, is trading at Rs.5,206.50 per share on Thursday, up 0.5 percent from its previous close. CLSA has assigned the company a “high-conviction outperform” rating, highlighting its focus on advancing AI, which is expected to drive growth despite market challenges.
The brokerage firm has set a target price of Rs.9,267 per share, indicating a potential upside of 82 percent. The company has positioned itself as a key player in AI-driven solutions, partnering with industry leaders to integrate AI into its digital transformation services.
Persistent is focused on enhancing its product offerings in AI, cloud, and automation, ensuring that it remains competitive in the rapidly evolving technology landscape.
3. HCL Technologies Ltd
HCL Technologies Ltd, with a market capitalization of Rs.4.09 lakh crore, is currently trading at Rs.1,541.95 per share on Thursday, reflecting a 0.08 percent incline from its previous close. HCL Technologies is actively investing in Generative AI to expand its capabilities in automation, data analytics, and digital transformation.
The company’s focus on AI-driven innovation is evident through its initiatives to incorporate AI solutions into client services, which enhances operational efficiency and decision-making.
HCL’s AI-led offerings, especially in cybersecurity and data cloud, are expected to drive growth. Despite recession fears, HCL is poised to capitalize on the emerging opportunities in the AI space, with a focus on strengthening its competitive edge in the technology sector.
Written by – Siddesh S Raskar
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