For Coforge, Morgan Stanley maintains an ‘Overweight’ rating but has cut its price target from ₹11,500 to ₹9,400.
Similarly, while retaining an ‘Overweight’ stance on TCS, the brokerage has reduced the price target from ₹4,660 to ₹3,950.HCL Technologies and Tech Mahindra have been assigned an ‘Equalweight’ rating, with price targets revised down to ₹1,600 from ₹1,970 and ₹1,550 from ₹1,750, respectively.
| Stocks | Rating | TP (current) | TP (earlier) |
| Infosys | EW | ₹1,740 | ₹2,150 |
| TCS | OW | ₹3,950 | ₹4,660 |
| HCL Tech | EW | ₹1,600 | ₹1,970 |
| Tech M | EW | ₹1,550 | ₹1,750 |
| Coforge | OW | ₹9,400 | ₹11,500 |
In its broader outlook on the IT sector, Morgan Stanley said that rapid shifts in the macroeconomic environment and technological evolution are creating downside risks for both revenue growth and valuation multiples in India’s IT services sector.
The brokerage mentioned that valuation multiples for select stocks could become more polarised.Additionally, it pointed out that lower real and nominal GDP growth in the US, coupled with the ongoing technology transition cycle, is increasing risks to revenue growth.
While currency movements provide some support for margins and earnings, the brokerage believes that valuation multiples still have room for further downside.
The Nifty IT index was the top sectoral loser in Tuesday’s trading session. Nine out of the 10 index constituents were trading in the red, with losses ranging from 1% to 4%.
Infosys was the biggest laggard, while heavyweight peers TCS and Wipro are also trading lower. In the Midcap IT segment, Mphasis, Coforge, and L&T Technology Services were each down around 1%.
The Indian IT stocks are reeling under pressure due to an expected slowdown in the US economy and uncertainty surrounding US trade policy.
The Nifty IT index settled 0.65% lower on Tuesday at 37,400.10.
