Ahead of the IT earnings season, scheduled to start on January 11, another global brokerage, JP Morgan, has provided its ‘neutral’ stance on the IT sector. The 5 themes that prompted the global brokerage to turn ‘neutral’ on the stock are: pivot to cost saving, declining drags from laggard industries, pro-cyclicality, new-term Gen AI preparatory work, and low base in CY 2023.

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Individually, stocks' ratings have been changed, while targets have been raised.

JP Morgan’s view      
Stock
 Rating Previous TP New TP
Infosys  Overweight from neutral Rs 1400 Rs 1800
HCL  Neutral from underweight  Rs 1070 Rs 1520
TCS Neutral from underweight  Rs 2900 Rs 3700
LTI Mindtree Retain underweight Rs 4100 Rs 5500
Mphasis Neutral from Underweight Rs 1700 Rs 2700
L&T Technology Services  Overweight from Underweight Rs 3200 Rs 5800
Tech Mahindra Underweight Rs 1000 Rs 1150
Tata Elxsi  Underweight  Rs 5000 Rs 6200

Earlier, Citi also gave its bearish view on IT stocks as it saw revenue growth at IT firms under its coverage universe to come in at 6 per cent in constant currency terms for FY25, as against its 2 per cent for FY24 and 8 per cent before the pandemic. Also, it views valuations as still at risk.