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3h ago

HSBC Cuts Indian IT Targets Ahead of Q2 Results as Blue-Chip Tech Turns Cyclical

HSBC cites AI price deflation plus macro uncertainty as sector growth resets to 4–5%.

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Infosys, HCL unlikely to revise upper end of FY26 guidance, says HSBC as it picks IT stocks
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Overview

  • HSBC lowered target prices for TCS (to Rs 3,260), Infosys (Rs 1,720) and HCLTech (Rs 1,580), calling top-tier IT no longer five-year buy‑and‑hold plays.
  • The brokerage expects Q2FY26 to mirror Q1 softness, with AI-related price pressure trimming growth by 2–3 percentage points annually over the next 3–4 years.
  • Infosys and HCLTech are unlikely to raise the upper end of FY26 revenue guidance, with large caps seen delivering 0–2% QoQ dollar growth and mid-tier firms tracking stronger prints.
  • Nuvama projects a stable quarter with sequential growth across most companies and sees mid-tier names such as Coforge, Persistent, LTIMindtree, Hexaware and Mphasis outperforming.
  • Earnings begin Oct 9 for TCS (then HCLTech Oct 13, Infosys Oct 16), with investor focus on H‑1B fee hikes, tariff uncertainty and TCS workforce actions following NITES’ forced-resignation allegations.