IT Stocks In Focus: IT stocks remained under pressure on Monday, with the Nifty IT index falling 0.84% to 27,923.95. However, the sector outperformed the broader market, with the benchmark Nifty50 plunging over 1% and slipping below the 22,900 mark.
All 10 constituents of the Nifty IT index traded in the red, led by Wipro, which declined 1.28% to Rs 161.92, followed by Persistent Systems (-1.26% to Rs 5,304.5), LTIMindtree (-1.17% to Rs 4,035.2), Infosys (-0.88% to Rs 991.4) and Tata Consultancy Services Ltd. (TCS), which fell 0.88% to Rs 2,063.7. Tech Mahindra, HCLTech, Oracle Financial Services Software, Coforge and Mphasis also traded lower.
The sector remained in focus after Citi retained its 'Sell' rating on TCS and lowered its target price to Rs 1,875 from Rs 2,040.
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The brokerage cited persistent challenges in the IT services sector and the recent rerating across IT stocks as reasons for reducing its valuation multiple on the company to 12x from 13x.
Citi analyst Surendra Goyal made marginal revisions to FY27-FY29 estimates for TCS to factor in exchange-rate movements and minor operational changes. However, the brokerage said the key change was the lower valuation multiple rather than any material revision to earnings expectations.
The revised target price implies a downside of around 10% from TCS' Sept. 25 closing price of Rs 2,083.95. After factoring in an estimated dividend yield of 5.7%, Citi expects a total return of negative 4.4% on the stock.
ADespite limited changes to earnings estimates, Citi maintained its 'Sell' recommendation, reflecting its cautious view on the sector's growth and valuation outlook.
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