The Indian IT sector has witnessed significant market capitalization erosion over the past six months, with major companies like TCS, Infosys, and LTIMindtree experiencing steep declines amid escalating trade tensions following US President Donald Trump’s aggressive tariff policies. Despite these challenges, brokerage firms have issued revised price targets that suggest potential recovery paths for select IT stocks.
Sharp Decline in IT Stock Valuations
Leading Indian IT services companies have seen substantial value erosion in recent months, with LTIMindtree experiencing the steepest decline of 21.78%, followed by Tata Consultancy Services (TCS) at 19.15%. Infosys, HCL Technologies, and Tech Mahindra registered declines of 9.77%, 9.53%, and 7.32%, respectively. This downward trend coincides with Trump’s announcement of various tariff measures designed to boost local trade and reduce America’s trade deficit.
The impact is reflected in sectoral performance, with the Nifty IT index slipping 9.91% and the BSE IT index shedding 12.46% over the six months. This widespread decline signals investors’ apprehension about future revenue prospects for IT companies heavily dependent on US clients.
The Trump Tariff Effect
President Trump’s tariff announcements have created significant market uncertainty, particularly affecting export-oriented sectors. In February 2025, Trump levied a 25% tariff on imports from Mexico and Canada, along with a 10% tariff on Chinese goods. On March 6, 2025, he modified these tariffs, stating that items compliant with the United States-Mexico-Canada Agreement (USMCA) would temporarily avoid tariffs, while non-compliant goods would face a 25% tariff.
These trade barriers have prompted many US companies to reconsider their discretionary spending, including IT services investments. This cautious approach has resulted in prolonged decision cycles for large IT deals and pauses in major programs by US banks. The situation has been further complicated by Trump’s indication of planned 25% tariffs on automobile, semiconductor, and pharmaceutical imports, with an announcement expected around April 2, 2025.
Revised Earnings Estimates and Growth Projections
In response to the changing macroeconomic landscape, several brokerages have adjusted their earnings estimates for Indian IT companies. InCred Equities has trimmed its projections for TCS to “account for tariff-led uncertainty,” citing concerns about slower global growth and potential changes in client IT spending patterns. The brokerage has reduced its Q4FY25F US$ revenue quarter-over-quarter growth estimate for TCS to 0.6% and now models a 4.5% US$ revenue CAGR over FY25F-27F, considerably lower than its previous 7.5% projection.
This downward revision reflects the assessment that tariff-led uncertainty could drive client caution, potentially resulting in earnings cuts across user industries. The initial optimism expressed by IT companies regarding improvements in short-duration deals and continued spending in the banking and financial services sector has been tempered by recent geopolitical and macroeconomic developments.
JM Financial’s Price Targets for IT Stocks
Despite market caution, JM Financial maintains a relatively optimistic outlook for several major IT stocks, projecting up to 20% upside potential for companies like TCS, Infosys, HCL Technologies, and Tech Mahindra. The brokerage has assigned a “buy” rating to TCS with a price target of Rs 4,680, representing significant upside from current levels. Similarly, Infosys carries a “buy” recommendation with a target price of Rs 2,200, while Tech Mahindra is also rated “buy” with a target of Rs 1,870.
For HCL Technologies, JM Financial has issued a “hold” rating with a price target of Rs 1,830. Wipro, which has gained 10% over the past six months, has been assigned a “buy” rating with a target price of Rs 360. In contrast, LTIMindtree carries a “sell” recommendation with a price target of Rs 4,800.
Current Stock Performance and Market Sentiment
The downward pressure on IT stocks has continued in recent trading sessions. On February 19, 2025, LTI Mindtree was the top loser on the Nifty IT index, falling nearly 3.46% to Rs 5,472 per share, while TCS declined by 2.63% to reach an 8-month low of Rs 3,771. Infosys shares dropped by approximately 2% to Rs 1,816, more than 9% below its 52-week high of Rs 2,006 achieved in December 2024.
Not all IT stocks have suffered equally. Companies with less dependence on the banking, financial services, and insurance sectors have demonstrated greater resilience. Persistent Systems, Mphasis, and Coforge traded approximately 1% higher despite the overall negative trend. Wipro also maintained positive momentum, trading at Rs 313 per share.
IT Stock Price Targets Comparison
Below is a comprehensive comparison of current prices and analyst price targets for major Indian IT stocks:
| Company | Current Price (as of Feb 2025) | JM Financial Price Target | Potential Upside/Downside | JM Financial Rating |
| TCS | Rs 3,771 | Rs 4,680 | +24.1% | Buy |
| Infosys | Rs 1,816 | Rs 2,200 | +21.1% | Buy |
| HCL Technologies | – | Rs 1,830 | – | Hold |
| Tech Mahindra | – | Rs 1,870 | – | Buy |
| Wipro | Rs 313 | Rs 360 | +15.0% | Buy |
| LTIMindtree | Rs 5,472 | Rs 4,800 | -12.3% | Sell |
Impact of Global Economic Factors
The performance of Indian IT stocks is closely linked to global economic conditions, particularly those in the United States. Recent data revealed US job cuts surged in February 2025 to 172,017, marking the highest monthly figure since July 2020 and representing a 245% increase from the previous month. Such developments could potentially impact discretionary IT spending by US corporations.
One immediate impact of the escalating trade tensions has been uncertainty in corporate decision-making processes, particularly for large-scale IT initiatives. JM Financial noted that tariffs and counter-tariffs have injected more uncertainty into the business environment, while inflation concerns and interest rate adjustments have further complicated the economic outlook.
The Indian IT sector is navigating complex global trade dynamics while addressing evolving client expectations and competitive pressures. The significant stock price corrections reflect investors’ concerns about potential growth moderation amid escalating trade tensions and macroeconomic uncertainties. However, differentiated price targets from brokerages indicate that market participants are distinguishing between companies based on their resilience and adaptability.
While near-term volatility may persist, companies that successfully leverage emerging technologies, diversify their service offerings, and maintain operational agility are likely to outperform over the medium to long term. For investors, the current market correction might present selective buying opportunities in fundamentally strong companies with proven track records of navigating economic cycles.
