IT stocks: For the past few months, the information technology (IT) sector has been facing selling pressure over artificial intelligence (AI) concerns that it could disrupt the trading tech models. Amid this, domestic brokerage firm JM Financial has revised its valuation multiples and trimmed the target prices for IT stocks, including Tata Consultancy Services Ltd (TCS), Infosys Ltd, HCL Technologies Ltd, and Tech Mahindra Ltd.  

The brokerage noted, "Slower revenue growth in FY27 than expectation does not help investor sentiment - we stay cautious." Consequently, the target multiples for several large-cap IT companies have been reduced, leading to downward revisions in their respective target prices.  

“Mid-tiers likely to outperform large tiers – valuation gap has widened. iii) Margins likely to be stable in FY27 given Rs depreciation,” it said.

When it comes to stock selection across the sector, JM Financial said, relatively, they prefer stocks with growth visibility, Infosys in top 6, while Mphasis Ltd in mid-tier and Sagility Ltd among BPO names.

Target price & rating for IT stocks

In the large-cap tier it has trimmed target prices, JM Financial has maintained its 'Add' rating on TCS, though it trimmed the target price to Rs 2,555 from Rs 2,730. Infosys has a 'Buy' recommendation, with a revised target price of Rs 1,410, down from the previous Rs 1,500. HCL Tech continues to hold a 'Reduce' rating, with its target reduced to Rs 1,185. Tech Mahindra remains an 'Add' for the brokerage, with a marginally lower target price of Rs 1,540 compared to the previous Rs 1,555. 

Meanwhile, LTIMindtree Ltd has a 'Reduce' rating, though its target price was upped to Rs 4,255 from Rs 4,115.  In the mid-cap space, Coforge Ltd maintains an 'Add' rating with an increased target price of Rs 1,600, up from Rs 1,330. Persistent Systems Ltd also holds an 'Add' rating, with a slight target increase to Rs 5,660 from Rs 5,630.