The agency has also placed Infosys on negative catalyst watch with a price target of ₹1,150, cutting revenues and earnings by 1-2% over FY24-26E. “Our UW thesis is driven by three main factors: (1) lower growth expectations in FY24 of ~3% CC YY, belo the lower end of the company’s guide of 4-7%, as we believe 1H will be weak, given the uncertain macro, and 2H won’t be able to carry the burden of lifting full-year growth; (2) weak leading indicators in the forms of declining net new large deal TCV and a sharp slowdown in hiring, suggesting weaker growth ahead; and (3) Infosys’s loss of growth leadership to TCS in 4Q23, while slipping margins are not yielding a growth advantage,” it said.

On HCL Technologies, the brokerage remained UW (underweight) and rolled forward to Mar’24, with a revised price target of ₹900 from ₹880 earlier. “We believe HCL’s P&P diversification has complicated its equity story and diluted organization-wide performance management. It has likely driven underinvestment in digital (lowest among peers) and masked margin dilution in its core IT services business. We see it as a source of avoidable drain on capital allocation and management resources when the core IT services industry growth is at a multi-decade high,” it said.

It has also maintained UW rating on Wipro and rolled forward to Mar’24, with a target price of up to ₹360 from ₹350 estimated earlier. “Wipro’s weak 1Q24 guide highlights the challenging macro environment that will lead to a sharp slowdown in growth in FY24E and keep it under pressure in the absence of operating leverage, in our view. Wipro’s higher consulting exposure keeps it at a higher risk of slowdown than peers,” it said.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)

JP Morgan report on Indian IT sector

IT stocks under stress as JP Morgan reiterates 'negative' stance; Infy, TCS lead fall