Citi remains cautious on Indian IT firms on global uncertainty, unattractive valuations

Mphasis

19/03/2025 05:11

** Too early to be constructive on India's IT sector due to global uncertainty, unattractive valuations, says Citi Research

** Brokerage expects IT stocks it covers to see 4% revenue growth in fiscal 2026, similar to current fiscal year estimates

** Says, recent U.S. data suggests tough near-term outlook for IT firms, which earn a large share of revenue from the U.S.

** Growth in IT is lower than pre-COVID levels; valuations may appear reasonable on a 5-year basis, but they are inflated by high growth in 2021 and 2022 - Citi

** Brokerage, which has a "sell" rating on nine out of 12 stocks under its coverage, reiterates cautious view

** Upgrades Mphasis MBFL.NS to "neutral" from "sell", lowers PT to 2,395 rupees from 2,720 rupees

** Index .NIFTYIT down 1.6% on the day, ahead of U.S. Federal Reserve's policy decision

** YTD, IT index down 17% vs Nifty 50's 3.2% drop

Citi's coverage of India's information technology companies https://reut.rs/4kzUtOe

 (Reporting by Bharath Rajeswaran in Bengaluru)

 ((bharath.rajeswaran@thomsonreuters.com; +91 9769003463;))