This midcap IT stock emerges brokerage’s top pick; new target set to beat 52-week high

Global brokerage UBS has started coverage on three Indian IT services companies — LTIMindtree, Mphasis and Persistent Systems — giving investors a fresh perspective on the sector. In its latest report, UBS issued a ‘Buy’ rating on Persistent Systems and Mphasis, while assigning a ‘Neutral’ call on LTIMindtree.

Persistent Systems gets ‘Buy’ with 25% upside

UBS said Persistent Systems is its most preferred stock in Indian IT, setting a target price of Rs 6,730 — about 25 per cent higher than its current price of Rs 5,380. The brokerage highlighted that between FY20 and FY25, Persistent grew faster than all its peers, gaining the most market share and expanding margins by nearly 600 basis points.

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According to UBS, Persistent’s strong base in product engineering services and lower reliance on legacy offerings positions it ahead of mid-tier and large peers for the next generative AI cycle. While valuations may appear rich, the brokerage believes the market is underestimating its growth potential.

Mphasis rated ‘Buy’ on revenue rebound hopes

UBS also gave a ‘Buy’ rating to Mphasis with a target price of Rs 3,370, implying about 15 per cent upside. The brokerage expects revenue to accelerate at a 10 per cent CAGR in FY25–28 after a muted phase linked to a large client (DXC), Digital Risk and sector-specific issues.

It added that the current valuation reflects only 7–8 per cent growth, while UBS estimates 11 per cent growth, leaving room for a possible re-rating.

LTIMindtree gets ‘Neutral’ rating

For LTIMindtree, UBS started coverage with a ‘Neutral’ rating and a target price of Rs 5,830, indicating a modest 9 per cent upside. The brokerage cited strong recent deal wins and GenAI potential but also flagged weaker performance compared with mid-cap peers, risks around margin targets and high client concentration.

UBS noted that LTIMindtree’s profile sits between mid-cap and large-cap, and its valuation reflects both, making the stock less compelling than Persistent or Mphasis at this stage.