IT Stocks Bear the Brunt as Jefferies Slashes Ratings, EPS Forecasts Amid Rising Recession Fears in the US
Leading Indian IT stocks came under heavy selling pressure on April 9, with shares of Tata Consultancy Services (TCS), Wipro, and Mphasis falling up to 5% intraday, after global brokerage firm Jefferies downgraded the Indian IT sector, citing increasing tariff-related risks that threaten to derail US GDP growth. The reciprocal tariffs implemented by the US under Donald Trump’s administration have triggered fears of a stagflationary environment and a potential recessionary phase in the world’s largest economy, prompting a reassessment of earnings and valuation expectations for Indian IT majors.
Jefferies revised its earnings per share (EPS) estimates downward by 2–14% across its coverage universe. The brokerage highlighted that it now prefers stocks with higher growth visibility and better margin resilience, leading to downgrades of TCS, Wipro, and Mphasis, while retaining ‘Buy’ ratings on Infosys, Coforge, and Sagility, albeit with reduced target prices. The developments follow a string of negative macroeconomic indicators in the US and a worsening outlook for discretionary tech spending by US clients—Indian IT’s primary revenue base.
TCS, Wipro, Mphasis downgraded by Jefferies due to macro headwinds
EPS estimates cut by up to 14% across Indian IT coverage
US tariff impact and stagflation fears weigh on sentiment
Growth visibility prioritized; Infosys, Coforge, Sagility preferred picks
Jefferies Cuts TCS Rating to ‘Hold’, Slashes Target Price by Over 25%
Tata Consultancy Services (TCS) was downgraded from ‘Buy’ to ‘Hold’ with Jefferies slashing the target price to ₹3,300, down sharply from ₹4,530 earlier. The revised target reflects negligible upside of just 0.2% from its previous close, signaling limited room for re-rating unless there’s a tangible recovery in the US economy.
TCS shares fell nearly 2% in early trade on April 9 to ₹3,240 apiece, extending recent losses as concerns mount over slowing demand for IT services, especially in BFSI and retail verticals.
Jefferies target price cut: ₹4,530 → ₹3,300
Downgrade: ‘Buy’ → ‘Hold’
TCS shares fall 2% to ₹3,240
Outlook hinges on US GDP recovery and client tech spending revival
Wipro Downgraded to ‘Underperform’; Target Price Slashed by Over 30%
Wipro Ltd. took the biggest hit, with Jefferies downgrading the stock to ‘Underperform’ from ‘Hold’ and aggressively cutting its target price to ₹210 from ₹310, citing persistent underperformance, weak execution, and low earnings visibility.
Shares of Wipro plunged nearly 5% to ₹235, making it one of the biggest laggards on the Sensex. The new target implies a downside potential of more than 15%, reinforcing bearish sentiment amid sector-wide growth stress.
Jefferies target price cut: ₹310 → ₹210
Downgrade: ‘Hold’ → ‘Underperform’
Wipro shares drop 5% to ₹235
Outlook clouded by weak order pipeline and margin pressures
Mphasis Downgraded to ‘Hold’; Target Cut by Nearly 30%
Mphasis, a mid-cap IT services firm with US exposure, was downgraded to ‘Hold’ from ‘Buy’, with Jefferies cutting its target price from ₹3,250 to ₹2,300, factoring in slower enterprise demand and higher exposure to discretionary tech spending. Despite the downgrade, the revised target implies a marginal 6% upside from the previous close, making it less bearish compared to Wipro.
Shares of Mphasis declined nearly 4% to ₹2,083, as investors priced in potential risks to margins and deal wins in the wake of US economic deceleration.
Jefferies target price cut: ₹3,250 → ₹2,300
Downgrade: ‘Buy’ → ‘Hold’
Mphasis shares fall 4% to ₹2,083
Caution over enterprise tech budgets and US client exposure
Selective Optimism for Infosys, Coforge, and Sagility Despite Target Cuts
Jefferies maintained a ‘Buy’ rating on Infosys, Coforge, and Sagility, citing relatively stronger execution, client diversification, and higher revenue visibility. However, target prices were reduced across the board in line with the broader sector de-rating.
Infosys: Target price revised from ₹1,835 to ₹1,700 (19% upside). Shares fell 3% to ₹1,386.
Coforge: Target trimmed from ₹10,350 to ₹7,860 (21% upside).
Sagility: Target lowered from ₹64 to ₹48 (23% upside), with shares down 1.5%.
While these stocks still present medium-term upside potential, Jefferies emphasized that re-rating will be contingent on stabilization of the US macro, a reduction in trade-related policy uncertainty, and signs of renewed IT spending by top clients.
‘Buy’ calls retained despite lower targets
Outperformance expected relative to peers
Growth visibility and deal pipeline cited as key positives
Sharp cuts reflect structural risks to US-led demand
Muted View on HCL Tech with Reduced Target, ‘Hold’ Rating Maintained
HCL Technologies retained its ‘Hold’ rating, but Jefferies cut its target price to ₹1,520 from ₹1,900, factoring in limited upside, client-specific risks, and headwinds in its products & platforms business. The stock fell over 2% to ₹1,371 in response to the note.
Target price cut: ₹1,900 → ₹1,520
‘Hold’ rating maintained
Shares down 2% to ₹1,371
Outlook constrained by margin volatility and weak discretionary IT spend
IT Sector Faces Prolonged De-rating Unless US Economic Momentum Recovers
Jefferies concluded that Indian IT firms are unlikely to witness a sector-wide re-rating unless there is a clear improvement in US GDP growth and trade policy clarity. The brokerage now recommends greater selectivity within the sector, prioritizing companies with predictable growth, strong deal pipelines, and operational leverage.
The cumulative downgrade and EPS cuts signal deepening caution across global investors toward export-heavy IT names, particularly in the absence of near-term growth triggers or margin catalysts.
Sector re-rating unlikely without US macro stabilization
EPS visibility and client diversification are key differentiators
Tariff risks and slowing US enterprise demand are central concerns
Investment sentiment hinges on global growth recovery signals
