IT crash ahead? CLSA downgrades TCS, Infosys, Wipro, other stocks; revises target prices. Here's why
CLSA downgraded several large IT stocks and cut their target prices amid continued AI-related concerns, while retaining a bullish view on select mid-tier IT companies. The brokerage said Q1 earnings were mixed across Indian IT and global peers, but expects AI-driven volumes to eventually offset pricing deflation by FY30.
While concerns about AI continue to weigh on investor sentiment, CLSA has downgraded several key IT stocks and revised their target prices. Despite this, CLSA remains optimistic about mid-tier IT vendors. For Q1 earnings, the brokerage noted a mixed bag for both Indian and global IT players. With AI volumes potentially surpassing deflation by FY30, CLSA anticipates a shift in USD revenue growth from low to mid-single digits.
CLSA downgraded its rating on Tata Consultancy Services (TCS), Infosys, and Tech Mahindra to 'Hold', and Wipro and Mphasis to 'Underperform', citing structural concerns. The brokerage also revised target prices for TCS and Infosys. Infosys' target price was increased to Rs 1,147, implying a 3% upside from its previous closing price of Rs 1,115. Similarly, TCS' target price was raised to Rs 2,326, indicating a 2% potential upside, while Tech Mahindra maintained its target price of Rs 1,634, suggesting a 3% upside.
However, CLSA has reduced its forecast for Wipro shares to Rs 152, implying a 15% downside potential from its previous closing price of Rs 178. For Mphasis, the brokerage set a target price of Rs 2,113, reflecting over 13% downside potential. CLSA remains bullish on Coforge and Persistent Systems, maintaining their 'High Conviction Outperform' ratings. It also keeps LTI Mindtree and Hexaware Technologies on 'Outperform'.
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