Jefferies downgrades six Indian IT firms over AI disruption fears

Infosys

23/02/2026 04:56

Updates

** Jefferies downgrades six Indian IT companies, citing expected structural changes in business from disruption caused by AI tools

** Downgrades India's largest IT exporter TCS TCS.NS to "underperform" from "hold"; cuts Infosys INFY.NS and HCLTech HCLT.NS to "hold" from "buy"

** Downgrades LTIMindtree LTIM.NS and Hexaware Technologies HEXW.NS to "underperform", Mphasis MBFL.NS to "hold"

** Nifty IT .NIFTYIT down 1.1%, top laggard among major sectors

** "AI may structurally change IT business mix towards consulting/implementation while shrinking managed services. This would not only increase cyclicality but also require a change in talent/operating model - thus adding risks" - Jefferies
     ** Brokerage cuts earnings estimates for IT cos by 1%-4%; expects 6% earnings CAGR over FY26-FY28

** Adds, IT stocks offer higher downside risk than upside even as Nifty IT index .NIFTYIT down 16% YTD

** Jefferies says Coforge COFO.NS, Sagility SAGL.NS, Inventurus Knowledge INVU.NS are its top picks in the sector

** MBFL, INFY down 1.6% each, while LTIM down 2%; TCS down 0.3%

** COFO and HEXW down 2.3% and 2.8%, respectively

Jefferies downgrades ratings on six Indian IT firms on AI disruption worries https://reut.rs/3ODM5Sc

 (Reporting by Vivek Kumar M)

 ((VivekKumar.M@thomsonreuters.com;))