Bernstein reduces target price on HCL Tech, LTIMindtree, and L&T Tech; here is why

Global brokerage Bernstein has revised its stance on few information technology (IT) stocks. As per the latest report by Bernstein, IT service companies are in the 'mid to late cycle', and cloud growth has been healthy and driven by artificial intelligence (Al).

Echoing a similar view as the brokerage, Justin Khoo, Senior Market Analyst, APAC-VT Markets said, "Going forward, the IT industry is set to focus on advancing AI and machine learning, expanding cloud and edge computing, enhancing cybersecurity, exploring quantum computing, rolling out 5G networks, emphasising sustainability, driving digital transformation, and integrating blockchain technologies. These trends will drive innovation and efficiency across industries." 

However, Bernstein said that IT services growth has remained subdued, and thus, the brokerage has reduced its rating on certain IT stocks.

Bernstein has maintained a 'neutral' rating on HCL Tech and has reduced the target to Rs 1,460 from Rs 1,600. 

Similarly, it has continued a 'neutral' rating on LTIMindtree and reduced the target to Rs 4,800 from Rs 5,440 apiece. 

Further, Bernstein maintained an 'underperform' rating on L&T Technology Services and reduced the target to Rs 4,070 from Rs 4,470 apiece. 

In April major IT blue-chip reported mixed Q4 results. As per Sunil Damania, Chief Investment Officer, MojoPMS, the IT sector underperformed in Q4FY24 and experienced a decline of approximately six per cent. This decline is primarily attributed to concerns about the business outlook. 

Backing the above statement Damania said, "In the current landscape, major IT companies are adopting a cautious stance due to macro uncertainties and geopolitical volatility. Analysis of the market reveals a tepid environment for discretionary spending. Clients are prioritising projects that yield immediate Return on Investment (ROI) while conserving cash."

Read more: Infosys, Wipro, HCL Tech, TCS: IT sector's Q4 performance declines 6%; what next?

IT stock performance in a year 

Catch all the updates of the May 22 session on Dalal Street here. For all other news related to business, politics, tech and auto, visit Zeebiz.com. 

DISCLAIMER: The views and investment tips expressed by investment experts on zeebiz.com are their own and not those of the website or its management. zeebiz.com advises users to check with certified experts before taking any investment decisions.