Morgan Stanley (NYSE:MS) has revised its target prices for leading Indian IT companies, including HCLTech, Infosys (NS:INFY), Wipro (NYSE:WIT), L&T Technology Services, Mphasis, and Tata Consultancy Services (NS:TCS), due to a less likely bear case scenario and potential long-term earnings growth. The announcement was made on Wednesday.
The revision comes as the BSE IT index is trading 13% below its December 2021 levels, even as the BSE Sensex has increased by 13%. Morgan Stanley's revised outlook is based on anticipated sustained price-to-earnings valuations from projected double-digit EPS growth in FY25. This growth is expected to be supported by both domestic and foreign institutional investors.
Among the companies in focus, HCLTech is expected to see mid-single-digit revenue growth. Meanwhile, firms like LTI Mindtree and Cyient are also on the radar. However, Morgan Stanley maintained an equal weight on TCS and Mphasis while downgrading Tech Mahindra.
The revision of target prices by Morgan Stanley underscores the potential for long-term earnings growth in the Indian IT sector amid market volatility. This development could influence both domestic and foreign institutional investors' strategies towards these stocks in the coming months.
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