Citi turns bearish on stocks: 6 of 8 Top IT stocks face downside risk

Synopsis: Citi raised target multiples for L&T Tech, Coforge, Persistent, LTIMindtree, and Tech Mahindra, but retained Sell ratings. Mphasis and Hexaware remain Neutral, reflecting limited upside despite slightly improved growth expectations.

Citi has revised its target prices across several Indian IT services companies, factoring in a slightly improved growth outlook and sector re-rating assumptions. However, despite higher valuation multiples for most stocks, the brokerage has largely maintained a cautious stance, retaining Sell ratings on the majority of names and Neutral ratings on a few.

Over the past five years, the Nifty IT index has delivered a return of 57%. It declined 14% over the last year, slipped 1.5% in the past six months, and gained 2% in the most recent month.

L&T Technology Services Ltd

Citi maintained a Sell rating on L&T Tech, raising the target price to Rs. 3,935 from Rs. 3,700, implying a 11% downside from current levels. The brokerage increased the target valuation multiple to 26x Mar’27, reflecting a slightly improved growth outlook for the company.

With a market capitalisation of Rs. 46,913 cr, the shares of L&T Technology Services Ltd are currently trading at Rs. 4,426 per share, up from its previous close of Rs. 4,380.55 per share.

Coforge Ltd

Citi retained a Sell rating on Coforge with a revised target price of Rs. 1,570, up from Rs. 1,530, signalling a 4% downside from present levels. The target multiple remains at 33x Mar’27 as Citi waits for more clarity on Coforge’s recently announced acquisition.

With a market capitalisation of Rs. 54,695 cr, the shares of Coforge Ltd are currently trading at Rs. 1,632 per share, down from its previous close of Rs. 1,654.30 per share.

Persistent Systems Ltd

Persistent Systems continues to receive a Sell rating from Citi, with the target price raised to Rs. 5,330 from Rs. 4,970, representing a 15% downside. The valuation multiple was increased to 42x Mar’27, reflecting modest improvements in sector growth expectations.

With a market capitalisation of Rs. 99,650 cr, the shares of Persistent Systems Ltd are currently trading at Rs. 6,317 per share, up from its previous close of Rs. 6,282.90 per share.

Mphasis Ltd

Citi maintained a Neutral rating on Mphasis, raising the target price to Rs. 2,905 from Rs. 2,780, offering a 3% upside. The revision reflects slightly better growth assumptions and a favourable sector re-rating.

With a market capitalisation of Rs. 53,573 cr, the shares of Mphasis Ltd are currently trading at Rs. 2,811 per share, down from its previous close of Rs. 2,826.15 per share.

LTIMindtree Ltd

Citi retained a Sell rating on LTIMindtree, revising the target price upward to Rs. 5,480 from Rs. 4,900, implying a 10% downside. The target multiple was increased to 27x Mar’27, supported by a more positive growth backdrop.

With a market capitalisation of Rs. 1,80,406 cr, the shares of LTIMindtree Ltd are currently trading at Rs. 6,085 per share, down from its previous close of Rs. 6,110.25 per share.

Tech Mahindra Ltd

Tech Mahindra received a Sell rating from Citi, with the target price revised to Rs. 1,395 from Rs. 1,290, suggesting a 14% downside. The target multiple was increased to 20x Mar’27, factoring in modest recovery expectations.

With a market capitalisation of Rs. 1,58,337 cr, the shares of Tech Mahindra Ltd are currently trading at Rs. 1,616 per share, up from its previous close of Rs. 1,607 per share.

Hexaware Technologies Ltd

Citi maintained a Neutral rating on Hexaware, raising the target price to Rs. 765 from Rs. 700, with a small 2% upside. The valuation multiple increased to 30x Mar’27 on expectations of slightly better sector growth.

With a market capitalisation of Rs. 45,948 cr, the shares of Hexaware Technologies Ltd are currently trading at Rs. 752 per share, down from its previous close of Rs. 758.35 per share.

Tata Technologies Ltd

Citi kept a Sell rating on Tata Technologies, revising the target price slightly to Rs. 585 from Rs. 590, reflecting a 10.5% downside. The brokerage remains cautious despite assumptions of a sector re-rating.

With a market capitalisation of Rs. 26,521 cr, the shares of Tata Technologies Ltd are currently trading at Rs. 654 per share, up from its previous close of Rs. 644.05 per share.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Citi turns bearish on stocks: 6 of 8 Top IT stocks face downside risk appeared first on Trade Brains.