IT Stocks Latest Update: Crisis looms over IT stocks, experts reduced the target price of these 6 companies, know details

IT Stocks Latest Update: In a report released on February 23, brokerage firm Jefferies downgraded the ratings of 6 major Indian IT companies. Cut their target price by 33%. The companies that have been downgraded include Infosys, HCL Tech, Mphasis, LTIMindtree, TCS, and Hexaware Technologies. The brokerage has also reduced its Earnings Per Share (EPS) estimate for these companies from 1% to 4%.

Fear of impact of AI on business model

Jefferies says that Artificial Intelligence can cause structural changes in the business model of IT service companies. The increasing use of AI may reduce the share of managed services, while the role of consulting and implementation services may increase.

This change may increase business volatility and companies may need to adjust their talent and operating models. This will also increase the risk. The brokerage also said that even though these stocks have fallen 16% so far this year, there is more risk of going down than going up.

What changes in which stock?

1. Infosys

Jeffrey has reduced the rating of Infosys from ‘Buy’ to ‘Hold’. Its target price has been reduced from Rs 1,880 to Rs 1,290. The new target price implies a decline of 5% from Friday’s closing level.

2. HCL Tech

HCL Tech’s rating has also been reduced from ‘Buy’ to ‘Hold’. Its target price has been reduced from Rs 1,885 to Rs 1,390. This means a decline of about 4% from Friday’s closing price.

3. emphasis

The brokerage has also reduced the rating of Mphasis shares from ‘Buy’ to ‘Hold’ and reduced its target price to Rs 2,450 from the previous Rs 3,410. Mphasis shares are already trading below this new price target. This means there is very little scope for further gains from Friday’s closing level of 2,365.

4. LTIMindtree

LTIMindtree’s rating has been downgraded to “Underperform” and the target price has been cut to Rs 4,300 from Rs 6,175 previously. The new target price implies a decline of about 12% from the current level.

5. TCS

The country’s largest IT company TCS has also been downgraded to ‘underperform’. The target price has been reduced from ₹3,485 to ₹2,350. This also means that there is scope for a decline of about 12.5% ​​from Friday’s closing price.

6. Hexaware Technologies

The rating of this IT company has also been downgraded to ‘Underperform’, and the target price has been reduced from 660 to 460. This means that there could be a decline of about 12% from the current level.

Who to trust?

Jefferies has selected Coforge, Sagility and IKS Health as its top picks in this sector. The brokerage believes that there may be structural changes in the IT sector in the coming times. Therefore, investors should choose stocks carefully.