Citi remains cautious on Indian IT despite a 20% fall, prefers these two names
Published on 02/03/2026 08:43 AM
Citi remains cautious on Indian IT despite a 20% fall, prefers these two namesCiti maintains a cautious stance on the IT sector and continues to prefer Infosys and HCL Technologies among large-cap names.By Meghna Sen March 2, 2026, 8:43:44 AM IST (Published)2 Min ReadThe Nifty IT index has corrected 19% calendar year-to-date, underperforming the Nifty by 16% so far this calendar year.
Brokerage firm Citi said a few common questions are emerging among investors. First, enterprises will need support in implementing AI, which should benefit IT services firms.
Second, if IT services remain relevant, what is driving the sharp correction. Third, valuations and FCF yields appear reasonable.
And finally, Indian IT stocks continue to trade at a premium to global peers.
Despite these arguments, Citi said it has cut target multiples to factor in higher risks to medium-term growth and terminal growth assumptions, leading to target price reductions of 14-29%.
The brokerage maintains a cautious stance on the sector and continues to prefer Infosys and HCL Technologies among large-cap names.
Separately, CLSA, in a note on the IT sector, highlighted commentary from Salesforce, which reported organic revenue growth of about 8.5% for FY26 and guided for 7-8% organic growth in FY27, implying a moderation.
In contrast, IT services companies such as Cognizant, Capgemini and EPAM Systems have guided for stronger growth next year.
CLSA said this divergence suggests AI is creating a net positive volume opportunity for system integrators, with clients preferring build over buy and benefiting from lower production costs.
This dynamic could allow system integrators to gain share from SaaS providers.
Within its coverage universe, CLSA sees Persistent Systems as having the highest exposure to Salesforce, while Infosys leads in Salesforce-related expertise.
The brokerage reiterated its high-conviction outperform rating on Persistent and its outperform rating on Infosys.Continue ReadingNote To ReadersDisclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.TagsHCL Technologies share priceInfosys share priceIT Sector