Shares of IT firms have undergone a roller coaster ride this year after US President Donald Trump on January 20 said he would impose an additional 10 percent tariff on Chinese imports while moving ahead with levies on Canada and Mexico. IT stocks such as LTIMindtree Ltd (19%), TCS (12%), Infosys Ltd (6.12%), HCL Technologies (13.64%), Wipro (6.66%), Tech Mahindra (11.23%), Mphasis (19%) and Coforge (13%) have fallen since Trump announced first round of tariffs on January 20.
Nifty IT index slipped 3.78% and BSE IT index lost 11.50% in the last 1.5 months, signaling gloomy sentiment over the fate of IT investors. Amid a highly volatile market, where investors are grappling to decode the effects of Trump tariffs on various sectors of the economy, Centrum Broking has come out with price targets for these IT stocks in a year.
"In our coverage universe, our top picks in IT Services are Infosys followed by TCS in tier 1 category. While we prefer LTIMindtree and Coforge in tier 2 category," the brokerage said.
The brokerage assigned an Add call to TCS with a price target of Rs 4,589 and gave a buy rating to Infosys with a buy call for a target of Rs 2,218 in a year.
Shares of IT major HCL Technologies received an Add rating with a price target of Rs 2,076. On the other hand, it has a reduce call for Wipro with a target of Rs 291.
Tech Mahindra received an ADD call with a target of Rs 1,868 and LTIMindtree can be bought for a target of Rs 7,188, according to Centrum Broking.
L&T Technology Service got a reduce call with a target of Rs 5,050 and 'REDUCE' for Mphasis with a target of Rs 3071. Coforge can be bought for a target of Rs 10,540 and Happiest Minds stock can be added to the portfolio with a target of Rs 769.
On the role of AI in the IT services sector, the brokerage said it is set to redefine the business model of IT Services.
"The Indian IT sector has generally shown agility in past technology waves (e.g., cloud, digital) and is doing so again for AI – with the added advantage of a huge skilled talent pool they are rapidly upskilling. Investors should look for companies that have put in place a clear AI strategy, early results (case studies or productivity metrics) and a culture of innovation as those will likely emerge as long-term winners," said Centrum Broking.
"While there may be short-term disruptions (e.g., reskilling costs, some legacy service revenue stagnation etc), the overall effect of AI should be to expand the pie of services and increase the value they deliver to clients, thus strengthening client relationships and opening new revenue streams. Gartner’s prediction that 80% of enterprises will use GenAI by 2026 implies a robust pipeline of AI projects for IT Service partners in the next few years. Firms ready to capture that demand will enjoy sustained growth," added the brokerage.