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Friday, June 21, 2024

Morgan Stanley Increases the Target Price for IT Stocks for Infosys, TCS, and HCL; What You Should Know

<p>While retaining mainly positive ratings, Morgan Stanley has increased its price targets for the majority of IT majors, including TCS, Infosys, and HCL Tech.</p>
<p>The brokerage company raised the objective due to anticipated strong sales growth in FY25, improved margins, and double-digit EPS growth.<img decoding=”async” class=”alignnone wp-image-207216″ src=”https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-jigyasa-singh-star-of-thapki-pyar-ki-denies-death-rumors-and-declares-guys-i-am-al.jpg” alt=”theindiaprint.com jigyasa singh star of thapki pyar ki denies death rumors and declares guys i am al” width=”1183″ height=”787″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-jigyasa-singh-star-of-thapki-pyar-ki-denies-death-rumors-and-declares-guys-i-am-al.jpg 275w, https://www.theindiaprint.com/wp-content/uploads/2023/09/theindiaprint.com-jigyasa-singh-star-of-thapki-pyar-ki-denies-death-rumors-and-declares-guys-i-am-al-150×100.jpg 150w” sizes=”(max-width: 1183px) 100vw, 1183px” title=”Morgan Stanley Increases the Target Price for IT Stocks for Infosys, TCS, and HCL; What You Should Know 9″></p>
<p>The upbeat revenue growth projections for FY25, according to Morgan Stanley, were made possible by stabilizing macrorisks, hyper-scale revenue growth leveling off, anticipated growth in BFSI (banking, financial services, and insurance) spending in CY24, announcements of sizable deal wins, and robust order bookings in the second quarter of FY24.</p>
<p>The firm has raised the target price for IT shares by 11% to 29%.</p>
<p>The EBIT margin is anticipated to increase from levels seen in Q1 FY25, according to the projection.</p>
<p>According to Morgan Stanley, the significant agreement that the firms are signing will foster development.</p>
<p>According to Morgan Stanley, the company values will continue to be reasonable.</p>
<p>TCS, Infosys, HCL Tech, LTI Mindtree continue to be “overweight”</p>
<p>Mphasis maintains “equal weight”</p>
<p>Wipro, L&T Tech, and Tata Elxsi continue to be “underweight”</p>
<p>Cyient’s rating has been raised from “equal weight” to “overweight” as a result of EPS improvements brought on by high margins and conservative revenue growth projections.</p>
<p>It had downgraded Tech Mahindra from “equal weight” to “underweight,” claiming that the era of great outperformance had ended and that there may be EPS pressure in the future.</p>
<p>“Roll ahead, a lower chance of a bear scenario and a greater probability of a bull scenario, as well as better long-term profitability, have all contributed to an increase in our price targets of 11 to 29%. With the exception of Wipro and Mphasis (whose forecasts were decreased), we have increased our revenue growth projections for ER&D companies, the company stated in a note.</p>
<p>View by Industry and Preference</p>
<p>Even if we are becoming more optimistic about growth, we continue to have an In-Line stance on the industry because: a) the sector has gotten substantially more expensive in recent months, as seen by the rise in the premium to the Sensex; and b) consensus is still not boosting its F24/F25 EPS expectations. As a result, we have chosen our stocks carefully and continue to retain our OW rating on the big cap stocks HCLT, LTIM, and Infosys. Due to rising demand, we upgrade Cyient (inside ER&D services) to OW.</p>
<p>According to the research, the revenue growth cycle is still showing good profitability and greater multiples.</p>
<p>We downgrade Tech M to UW (strong rally despite earnings cut making valuation more expensive, low confidence on growth revival in Telecom vertical and potential turnaround, due to management changes well in the price) and maintain UW on Wipro (low valuation but low confidence on revenue growth gap narrowing vs peers). Despite a solid order book and growth that has peaked on a quarter-over-quarter basis, we retain our EW ratings on TCS and MphasiS. We maintain UW on Tata Elxsi (growth probably below average and high valuations) and LTTS (low confidence on organic revenue growth estimate of 10% yoy in FY24 improving and significant recent outperformance) within ER&D Services, according to the study.</p>

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