- Citi has lowered target prices for several Indian IT stocks due to weak growth outlooks
- Target price cuts reflect reduced valuation multiples amid weaker investor growth expectations
- Stocks reviewed include TCS, Tata Technologies, Indegene, Hexaware, Mphasis, L&T Tech, Coforge
Citi has revised its target prices downward for several Indian IT stocks, citing a challenging growth outlook and a broader decline in valuations across the sector. The firm has maintained its cautious stance on most counters, with Sell ratings reiterated on most of the stocks under review. The only exception is Hexaware Technologies, which has a Buy rating despite a trimmed target price.
Citi's updates reflect minor changes in financial estimates for the fiscal years 2025-2028, primarily to account for currency fluctuations and operational adjustments. However, the main reason for the downward revision in target prices is a reduction in valuation multiples, which is a measure of how much investors are willing to pay for a company's earnings due to weaker growth expectations.
TCS
Citi has lowered its target price for Tata Consultancy Services to Rs 2,850 from Rs 3,135. The stock is now valued at 20 times its projected earnings for March 2027, down from 22 times earlier. The 'Sell' rating remains unchanged due to muted growth prospectus.
Tata Technologies
For Tata Technologies, Citi has reduced the target price to Rs 605 from Rs 635. The company is now valued at 30 times its estimated earnings for March 2027, compared to 32 times earlier. The 'Sell' recommendation continues.
Indegene
Citi has kept its target price for Indegene unchanged at Rs 540. The valuation remains at 25 times projected earnings for March 2027. Despite the sector's challenges, Citi believes the risks are already reflected in the current valuations and maintains a 'Sell' rating
Hexaware Technologies
Hexaware Technologies is the only stock with a 'Buy' rating. Citi has slightly reduced its target price to Rs 860 from Rs 890, valuing the company at 33 times its expected earnings for March 2027, down from 34 times earlier.
Mphasis
Citi has revised the target price for Mphasis to Rs 2,860 from Rs 2,865. The valuation multiple remains at 26 times earnings for March 2027. The 'Neutral' rating is supported by a strong order book and exposure to the resilient banking and financial services sector.
L&T Technology Services
The target price for L&T Technology Services has been cut to Rs 3,735 from Rs 4,015. Citi now values the stock at 25 times its projected earnings for March 2027, down from 27 times earlier. The 'Sell' rating remains unchanged.
Coforge
Citi has reduced its target price for Coforge to Rs 1,530 from Rs 1,675. The valuation multiple has been lowered to 33 times earnings for March 2027, from 36 times previously. The brokerage continues to recommend a 'Sell'.
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