Key Points
Indian IT companies have posted their worst results in 11 quarters, and stocks in tier-one tech firms have dropped up to 21% in the past three months..
As a result, BofA Securities, despite analysts being slightly overweight on the sector, has issued an underweight on Indian IT stocks with neutral ratings for Infosys and TCS, and predicting that Wipro and Tech Mahindra will underperform.iStock..
As the demand for IT services looks in the grip of a slowdown with no hopes of recovery in the first two quarters of FY24, tier-I tech stocks have lost up to 21% in the last 3 months with Infosys being the top loser in the pack...
Our FY24/25 EPS estimates are 1-11% below consensus and with the sector still trading at 8% premium to its 10-yr average and 13% premium to Nifty, we remain selective with Infosys being our only pick," Jefferies analysts Akshat Agarwal and Ankur Pant said...
Analysts say that despite heavy outflows, FII positioning remains slightly overweight on the sector and has potential to reduce further.. High growth expectations coupled with expensive valuations at 21x vs average 19.8x make us underweight on the sector, said BofA Securities head of India research Amish Shah...
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