IT stocks fall as CLSA downgrades TCS, HCL; reiterates sell call on Wipro, LTIMindtree

CLSA analysts say HCL and Infosys growth guidance would be a negative catalyst for TCS, HCL and Wipro

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IT stocks fell at open on March 5 on the NSE after brokerage CLSA downgraded TCS and HCL and reiterated its “sell” call on Wipro and LTIMindtree. While the 2024 growth outlook on the sector remains “weak at best”, this is not being reflected in valuations of the stocks, CLSA analysts have said.

All four stocks closed almost a percent down on March 4. At open, TCS was trading at Rs 4,033.10 (-1.1 percent), HCL at Rs 1,608.55 (-1.79 percent), Wipro at Rs 518.65 (-0.35 percent) and Rs 5,177.80 (-0.75 percent).

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The top-down approach to IT services sector demand outlook was reminiscent of 2019 and the 2024 guidance from global companies didn’t exude confidence, it said.

The outlook for banking, retail and telecom in 2024 was almost similar to what it was in 2023. CLSA analysts said growth guidance by HCL and Infosys would be a negative catalyst for TCS, HCL and Wipro.

The brokerage has downgraded TCS and HCL to “sell” from a “underperform”.

Also read: Chip Wars: How Infy, HCLTech, Wipro and Tech Mahindra are walking the semiconductor talk

Over the past year, HCL has gained over 45 percent, Wipro 32 percent, TCS 21 percent, LTIMindtree 8.15 percent and Infosys 8 percent.

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