Shares of L&T Technology Services Ltd (LTTS) tumbled 5.41% to ₹4,391.65 on Tuesday following a downgrade by Motilal Oswal, which cited valuation concerns and macroeconomic uncertainty affecting the IT sector.
Brokerage Outlook and Sector Concerns
Motilal Oswal downgraded LTTS to ‘Neutral’, while also lowering its outlook on Infosys and Wipro, highlighting diminished probability of US rate cuts, geopolitical risks, and corporate caution on spending. The brokerage emphasized that enterprises have adopted a “wait-and-watch” approach from January to March, delaying IT investments.
Despite advancements in GenAI adoption, the report noted that the shift from capital expenditures (capex) to services spending is not happening as expected, impacting IT sector growth.
Stock Downgrades and Target Price Cuts
- Wipro downgraded to ‘Sell’ with a target price of ₹240.
- Infosys downgraded to ‘Neutral’, target price reduced to ₹1,650.
- LTTS downgraded to ‘Neutral’, target price cut to ₹5,100.
- Tech Mahindra upgraded to ‘Buy’ as a preferred pick.
Revised IT Sector Growth Forecasts
| Company | FY26 Earlier Est. | FY26 Revised | FY27 Earlier Est. | FY27 Revised |
|---|---|---|---|---|
| TCS | 6.2% | 3.5% | 7.6% | 6.7% |
| Infosys | 7.3% | 5% | 8.3% | 7.4% |
| Wipro | 4.1% | 2.9% | 5.9% | 4.2% |
| HCL Tech | 6.6% | 5.3% | 8% | 7.3% |
| Tech Mahindra | 4.4% | 3.5% | 7.3% | 7.4% |
With pricing pressure, demand softness, and slowing discretionary spending, analysts anticipate continued volatility in the IT sector, keeping stocks under pressure in the near term.
