Shares of Tata Consultancy Services (TCS) fell nearly 2% on Tuesday as Morgan Stanley raised concerns over the IT sector, citing a challenging macroeconomic environment and evolving technology trends. The brokerage warned of downside risks to revenue growth and valuation multiples, despite currency movements supporting margins.
Morgan Stanley’s Sector Outlook
Morgan Stanley maintained its ‘Overweight’ rating on TCS, but lowered its price target to ₹3,950 from ₹4,660. The firm emphasized that TCS remains a better bet than Infosys, given the latter’s recent downgrade to ‘Equal Weight’ with a target cut to ₹1,740 from ₹2,150.
The brokerage also prefers:
- Tech Mahindra over HCLTech
- Coforge over Mphasis in the mid-cap IT space
Revised IT Stock Targets by Morgan Stanley
- Coforge: ‘Overweight’ rating maintained, target cut to ₹9,400 from ₹11,500
- TCS: ‘Overweight’ rating reiterated, target reduced to ₹3,950 from ₹4,660
- HCL Tech: ‘Equal Weight’ rating unchanged, target lowered to ₹1,600 from ₹1,970
- Tech Mahindra: ‘Equal Weight’ maintained, target cut to ₹1,550 from ₹1,750
Market Performance & Outlook
At ₹3,514.90 per share, TCS is trading lower than its previous close of ₹3,575.30. The company’s market capitalization now stands at ₹12.73 trillion, with an average volume of 2.37 million shares traded.
Morgan Stanley’s cautious approach highlights softening demand, pricing pressure, and a potential slowdown in IT spending, which could impact sector-wide earnings in the near term.
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