IT stocks could see re-rating as digital businesses see high growth

Mumbai: Indian technology services companies like TCS, Infosys and HCL Technologies could see a substantial big re-rating of shares driven by growth of digital services in the coming years, much like the re-rating of shares that happened in Big Tech, FAANG (Facebook, Amazon, Apple, Netflix and Google (Alphabet)) companies in the last few years, according to analysts.

In the last five years, shares of FAANG companies have seen rapid growth in keeping with steadily rising revenue performance. Edelweiss Securities in a note said that Indian IT services companies too would see a hike in earnings growth which would lead them to trade higher than their currently discounted valuations compared to global peers like EPAM and Luxoft.