The Hong Kong-based brokerage downgraded TCS to ‘Sell’ for the price target of Rs 3,925 from an earlier ‘Underperform’ rating. It also recommended a ‘Sell’ call on HCL from an initial ‘Underperform’ stance for a price target of Rs 1,536.
CLSA in its review note said that the growth outlook for 2024 remains weak at best and is currently not getting reflected in valuations. The 2024 guidance from global IT service companies does not exude confidence, it said while estimating a further downside risk to FY25 estimates.
In its view, the mid-single-digit revenue growth guidance by HCL and Infosys in April 2024 would be negative.
IT was the worst-performing sector today in the early trade and fell over 600 points to the day’s low of 36,708.80. All 10 stocks in the Nifty IT index were trading in the red with Persistent Systems being the biggest loser, down by 2.35%.
Other heavyweights, including Infosys, LTIMindtree, Wipro and Tech Mahindra fell up to 1.07%.A rub-off impact was seen in smaller IT counters as well. Cyient and Firstsource Solutions surged 6% and 14% intraday.Also Read: Tata Motors shares rally 8% to fresh high on value discovery hopes after demerger
Cyient declined 1.6% while First Source Solutions dropped 1.12% around this time. Midcap IT play Coforge was down 1.2% around this time.
TCS had reported a higher-than-expected revenue for the quarter ended December 2023, whilst a bottomline that trailed Street’s expectations. Following the earnings, Morgan Stanley had upgraded the stock to Overweight while raising its price target. Meanwhile, Motial Oswal and Nuvama had reiterated their buy stance on the counter and Kotak Institutional Equities took an ‘Add’ rating on TCS shares.
HCL Tech on the other hand, had reported a consolidated net profit jump of 6% year-on-year to Rs 4,350 crore for the quarter ended December 2023. It was Rs 4,096 crore in the year-ago period. Following its results, Jefferies had recommended a Hold on the counter, while Nuvama and Ambit had maintained buy and sell views, respectively.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
