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Stocks To Buy: UBS bets on two Midcap IT shares for revenue recovery, growth prospectsUBS said the Persistent System's current valuation (around 44x 1 year forward price-to earnings) price in flattish margins and a 14-15% revenue CAGR, which, according to UBS, appears pessimistic. By Shloka Badkar   September 15, 2025, 8:43:53 AM IST (Published)2 Min ReadBrokerage firm UBS on Monday, September 15, initiated coverage on two Midcap IT stocks, Mphasis Ltd. and Persistent Systems Ltd., with a "buy" recommendation, and projecting up to a 25% upside.

UBS has ascribed a price target of ₹3,730 per share for Mphasis, which implies a potential upside of 16% from Friday's close, while for Persistent, UBS has a target of ₹6,730, which implies a potential upside of 25%.

Mphasis

UBS said it likes Mphasis largely due to its potential recovery in revenue growth in the near term, which is not entirely priced-in.

The brokerage said that headwinds from a large customer DXC, its subsidiary Digital Risk, and vertical specific issues, have largely eased.

UBS expects Mphasis' revenue to grow at a Compounded Annual Growth Rate (CAGR) of 10% over financial year 2025-2028, compared to a 2% CAGR from financial year 2022-2025.

The current valuations, although at a premium to its three-year average, price in a 7-8% revenue CAGR over FY25-30 compared to estimates of 11% for that period.

Out of the 39 analysts that have coverage on the stock, 25 have a "buy" rating, eight have a "hold" rating and six have a "sell" rating.

Persistent Systems

UBS said it likes Persistent Systems as:

Strong execution capabilities, which made it the fastest growing IT services company over financial year 2020 - 2025

It has reported the highest market share gains over the past five years, as per Gartner.

It has resilient margins, which are up around 600 basis points over the same period. Most peers have margins that have either remained range-bound or have declined from the base quarter.

It has a focused exposure to product engineering and low exposure to legacy services.

It has the strongest positioning, compared to mid-tier and large-cap peers, for the upcoming GenAI cycle.

UBS said the company's current valuation (around 44x 1 year forward price-to earnings) price in flattish margins and a 14-15% revenue CAGR, which, according to UBS, appears pessimistic.

Of the 43 analysts that have coverage on the stock, 21 have a "buy" rating, eight have a "hold" rating and 14 have a "sell" rating.

Shares of Mphasis and Persistent Systems ended the previous session 0.8% and 0.2% lower, respectively.

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