Goldman Sachs downgrades LTIMindtree, cuts Infosys, TCS targets amid tariff uncertainty

So far this year, Nifty IT index plunged 14 percent

Global brokerage firm Goldman Sachs has issued mixed ratings for the Indian IT sector as it navigates a shifting macroeconomic landscape and uncertainties surrounding US tariffs. The brokerage has downgraded LTIMindtree to "neutral", retained its "sell" call on Wipro, but maintained "buy" ratings for TCS and Infosys.

Goldman Sachs has also made a sharp downward revision to its FY26E revenue growth forecast for India's IT services sector, now expecting just 4 percent year-on-year growth in constant currency terms, a reduction of 230 basis points from its previous estimate.

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Reflecting this cautious outlook, the brokerage firm has cut price targets across key IT stocks, lowering Wipro's target to Rs 4,500 from Rs 6,570, while adjusting targets for TCS and Infosys to Rs 4,230 and Rs 1,790 per share, respectively.

The primary reason for this downgrade, according to Goldman Sachs, is the heightened macroeconomic uncertainty in the US, a key market for Indian IT firms.

The firm pointed out that its US economists recently slashed their GDP growth forecast for 2025 to 1.7 percent from 2.4 percent at the beginning of the year. Additionally, they have raised the 12-month recession probability to 20 percent from 15 percent, citing the negative impact of tariffs.

Meanwhile, another brokerage firm, UBS, has also lowered its target prices for Indian IT stocks, attributing the cuts to company-specific challenges that could weigh on revenue growth.

UBS anticipates a 5-7 percent downward revision in earnings estimates, yet remains optimistic about FY26, expecting the sector to outperform fiscal 2025.

Despite near-term headwinds, UBS believes the recent market correction has been excessive, arguing that Indian IT stocks are currently trading at a 5 percent discount to their five-year average. The firm expects a short-term rebound in the sector.

In its latest adjustments, UBS has reduced the target price for TCS to Rs 4,250 from Rs 4,650, Infosys to Rs 2,100, and Wipro to Rs 315 per share. Price targets for HCL Tech and Tech Mahindra have also been lowered to Rs 2,030 and Rs 1,470, respectively.

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