Coforge The IT Outlier? Brokerages Slash Target Price For TCS, Infosys, Wipro And Other Stocks

Across brokerages, Coforge and Mphasis remain among the preferred picks, while weak demand, AI-led investments, wage hikes and margin pressures continue to weigh on the broader sector outlook.

Morgan Stanley, Goldman Sachs, and Citi cut target prices for major Indian IT stocks citing weak demand

Morgan Stanley downgraded TCS to Equal-weight and cut its target price to Rs 2200 from Rs 2880

Goldman Sachs maintained a neutral-to-negative outlook, preferring TCS for valuation comfort

Let us know.

India's IT sector is facing fresh pressure, and that has prompted Morgan Stanley, Goldman Sachs and Citi to lower target prices across several large- and mid-cap IT stocks, citing weak demand, slowing earnings growth and limited near-term catalysts for a sector re-rating.

Morgan Stanley downgraded TCS to Equal-weight from Overweight while slashing its target price to Rs 2,200 from Rs 2,880. The brokerage also reduced price targets for Infosys, HCLTech, Wipro, Tech Mahindra, LTIMindtree, Tata Elxsi, Cyient and others. It, however, raised its target price on Coforge to Rs 1,700, reiterating its Overweight rating.

Goldman Sachs also maintained a neutral-to-negative stance on the sector, saying Indian IT services are headed for a fourth consecutive year of low single-digit growth. The brokerage continues to prefer TCS, citing relatively better valuation comfort, while remaining cautious on Wipro and Tech Mahindra.

Citi echoed a similar view, cutting target prices on TCS, Infosys, HCLTech, Tech Mahindra, Wipro and Persistent Systems, while maintaining a Sell rating on most large-cap IT names.

Across brokerages, Coforge and Mphasis remain among the preferred picks, while weak demand, AI-led investments, wage hikes and margin pressures continue to weigh on the broader sector outlook.

TCS – Downgrade to Equal-weight with Overweight; Cut TP to Rs 2200 from Rs 2880

Infosys – Maintain Equal-weight; Cut TP to Rs 1112 from Rs 1380

Wipro – Maintain Underweight; Cut TP to Rs 161 from Rs 192

Tech Mahindra – Maintain Underweight; Cut TP to Rs 1160 from Rs 1410

HCL Tech – Maintain Equal-weight; Cut TP to Rs 1105 from Rs 1410

L&T Tech – Maintain Equal-weight; Cut TP to Rs 3460 from Rs 3530

LTM – Maintain Equal-weight; Cut TP to Rs 4000 from Rs 4410

Cyient – Maintain Underweight; Cut TP to Rs 820 from Rs 900

Tata Elxsi – Maintain Underweight; Cut TP to Rs 3780 from Rs 4200

Coforge – Maintain Overweight; Hike TP to Rs 1700 from Rs 1500

During the 2015-17 cycle, large-cap stocks bottomed out at 11-13x two-year forward P/E

TCS's premium to Accenture has risen to 40%+, which puts the entire group's multiples at risk in the near term

Expect a muted Q1 with subdued commentary for Q2; see risks to FY27 revenue guidance ranges

Sharp currency depreciation helped mitigate margin pressure; refresh/renewal cycle to bring margin pressure from here

Low-single-digit EPS CAGRs could mean further P/E de-rating

Key ideas: Prefer Infosys and TCS over Wipro. Tech Mahindra, and HCLTech in large caps

Overall stance remains neutral to negative on India IT

Buy only on TCS due to relatively better valuation comfort

India IT heading towards fourth straight year of low single-digit growth

Valuation and weak growth outlook seen as not very compelling

Pressure led by wage hikes, AI investments and competition

Limited near-term triggers for valuation re-rating in sector

Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.