Goldman cuts Infosys, TCS to ‘sell’ on looming slowdown, upgrades Wipro

Goldman Sachs downgraded top Indian information technology service providers Tata Consultancy Services and Infosys to “sell,” from “buy,” citing a potential slowdown in dollar revenue growth in the face of impending macroeconomic stress.

“We believe a slowdown in discretionary IT services spend around the growth and transformation agenda will be quite material and something not yet completely reflected in the street’s double-digit revenue growth forecast for the industry for FY24,” Goldman analysts said in a note.

Goldman said it remains “more sanguine” on the EBIT margin forecasts than on revenue of Indian IT companies, given multiple levers such as higher employee utilisation, controls on variable pay and annual wage hikes.