Morgan Stanley has raised concerns over the IT sector, citing a shifting macroeconomic environment and evolving technology landscape as key risk factors. The brokerage noted that revenue growth and valuation multiples are facing downside risks, despite currency movements supporting margins.
As part of its sector outlook, Morgan Stanley downgraded Infosys to ‘Equal Weight’ from ‘Overweight’, cutting its target price to ₹1,740 from ₹2,150. The firm believes that TCS is a better bet over Infosys, while Tech Mahindra is preferred over HCLTech, and Coforge is favored over Mphasis in the mid-cap IT space.
Morgan Stanley also revised its price targets for key IT stocks:
- Coforge: ‘Overweight’ rating maintained, but target cut to ₹9,400 from ₹11,500.
- TCS: ‘Overweight’ rating reiterated, with target reduced to ₹3,950 from ₹4,660.
- HCL Tech: ‘Equal Weight’ rating unchanged, but target lowered to ₹1,600 from ₹1,970.
- Tech Mahindra: ‘Equal Weight’ maintained, target cut to ₹1,550 from ₹1,750.
Morgan Stanley’s cautious stance reflects concerns over demand softness, pricing pressure, and a potential slowdown in IT spending, which could impact earnings growth in the near term.
Disclaimer: The above stock recommendations are based on brokerage reports and do not constitute financial advice. Investors are advised to conduct their own research before making investment decisions.
