Since the companies and various businesses continue to experience the brunt of higher inflation and decline in consumer confidence, most of the investors are limiting themselves from making investments in stocks. Even though there are some tensions prevailing in the economic environment, investors should focus on the stocks which have the potential to grow even in the current environment. For example, Technology industry is expected to see strong growth over next decade given the momentum in AI, machine learning, robotics, etc. Therefore, investing in the best IT stocks can be a good starting point for the investors. Investing in technology companies should bear fruit as this industry is expected to dodge all the challenges which are being faced by global economies. Investing in best IT stocks in India should help the investors in 2024 when spending increases.
Experts believe that worldwide IT spending should reach more than $5.1 trillion in 2024 as businesses plan to purchase automation and efficiency technologies to support growth at scale with lesser number of employees. Worldwide spending on IT, including investments in software and communications services, should increase by 4.3% this year, touching $4.7 trillion in 2023 in comparison to $4.5 trillion in 2022. Experts have projected that global IT spending should see a rise of ~8.8% in 2024, touching ~$5.13 trillion next year. Top 3 largest global IT markets which should generate most revenue include: IT services, software and communication services. Experts opine that while some markets might experience a decline in 2023, all 3 should be able to rebound in 2024 in terms of sales.
With this in mind, let us have a look at best IT stocks to consider.
1. Nucleus Software Exports Ltd.
The company offers lending and transaction banking products to global financial services industry. Its software supports the operations of over 200 financial institutions in more than 50 countries, aiding retail lending, corporate banking, cash management, mobile and internet banking, etc.
In 1Q24, revenues of the company on consolidated basis came in at INR206.81 crore for the quarter ended 30th June 2023 in comparison to INR128.84 crore in 1Q23. PAT of the company in 1Q24 came at INR54.88 Crore on standalone basis against INR13.17 Crore in Q1 of FY23. PAT on consolidated basis was INR53.56 Crore against INR10.77 crore in 1Q23.
In forthcoming quarter, the company will continue to focus on delivering advanced and strong technology for Banking, Financial Services, and Insurance (BFSI) sector, with strong focus on providing significant value and unique innovative solutions. The company has a thorough understanding of customers’ diverse requirements, mainly in technologies including AI/ML and composable architecture which integrates them seamlessly and securely with financial ecosystem.
Its innovative products are well-positioned to play pivotal role in supporting digital transformation of banking environment. The company is optimistic about current dynamic banking landscape and expects huge potential for growth. Given the company’s resources and market position, it is expected to create positive impact on shaping future of financial industry.
2. Cigniti Technologies Ltd
The company has been categorised as a global leader in offering AI-driven, IP-led strategic digital assurance, software quality engineering, software testing, automation and consulting services. It has headquarters in Hyderabad, India and its global offices are spread throughout USA, U.K., UAE, Australia, South Africa, Czech Republic, and Singapore.
The company continues to reinvent itself and it has expanded its horizons into Digital Engineering services with more capabilities to help clients in achieving market leadership in digital world. In FY24, the company continues to emphasize proactive quality engineering, Data Engineering, Data & Insights, and Digital Engineering Services.
3. Tata Elxsi Ltd
Tata Elxsi started its business on 5th May 1989 in Bangalore, the Silicon Valley of India, and the focus was on developing and promoting applications of electronics, embedded systems, and software. It brings together best technology and user-centric design expertise to aid customers in delivering innovative solutions.
It announced its first quarter results for the period ending 30th June 2023. Revenues from operations came in at INR850.3 crore and its profit before tax was INR248.3 crore. While overall global economic outlook is difficult, the company’s customer focus and targeted efforts to maintain growth momentum continues to show good results. During 1Q, its Healthcare & Lifesciences business saw healthy QoQ growth of 3.4% and this exhibited significant improvement over performance during the previous 2 quarters. This vertical saw new product development deal wins for medical diagnostics and Smart Hospital equipment.
The company appears to be well-positioned to take advantage of several opportunities which are presented by digital revolution in business and consumer markets. Even though there remains muted macroeconomic outlook for large economies, the company’s unwavering dedication to remaining competitive should enable it to continue to write growth narrative.
4. Persistent Systems
The company is a trusted digital engineering and enterprise modernization partner.
It saw 35.3% year-on-year growth, with $1.036 billion in full-year revenue supported by 12 quarters of industry-leading sequential growth. Operational discipline helped in generating strong earnings before interest and taxes (EBIT) margin, closing the year with +58.5% year-over-year.
Considering challenging environment, the company seems to be well prepared and strongly positioned to support new and existing clients in navigating turbulent times and implement tactical and strategic plans. Over previous 3 years of its journey to $1 billion in annualized revenue, the company has future-proofed itself and embedded resiliency into its organization. Focus is on adjusting operations to ongoing economic, market and technology shifts.
Conclusion
While above are few of the best IT stocks which investors should consider investing for long-term, there are several other technology companies which should tackle the current economic environment. All the major economies were under distress because of Ukraine war, stress in supply chains, post-COVID pressures, and banking crises in the United States and Europe.
Therefore, it will always be beneficial to invest in technology sector as this sector has strong growth opportunities for the long-term. India continues to see an increase in cloud adoption, technology-driven business innovation, and drive to use technology as a tool. Collectively, these measures should support the technology industry over long-term.
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