Citi Cautious on Indian IT Despite 20% Fall, Prefers Infosys, HCL Tech

• Citi maintains a cautious stance on the Indian IT sector, cutting target multiples due to higher risks to medium-term growth.
• The Nifty IT index has corrected 19% year-to-date, underperforming the Nifty by 16%.
• Citi prefers Infosys and HCL Technologies among large-cap names, despite reasonable valuations and FCF yields.
• CLSA notes Salesforce's moderated growth guidance but highlights stronger growth projections from IT services firms like Cognizant and Capgemini.
• CLSA suggests AI is creating a net positive volume opportunity for system integrators, allowing them to gain share from SaaS providers.