Jefferies downgrades 6 Indian IT firms over AI disruption fears

LTM

23/02/2026 03:30

** Jefferies downgrades 6 Indian IT consulting companies, citing pain due to structural changes in business due to AI tools' disruption may not be over

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

** Says, "AI may structurally change IT business mix towards consulting/implemenation while shrinking managed services. This would not only increase cyclicality but also require a change in talent/operating model - thus adding risks"

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

** Downgrades LTIMindtree LTIM.NS, Mphasis MBFL.NS, Hexaware Technologies HEXW.NS

** Notes, "While 3Q results led to earnings upgrades for nearly all IT firms, recent developments in AI have raised concerns on the medium- to long-term growth outlook"

** Cuts earnings estimates by 1%-4%; expects 6% earnings CAGR over FY26-FY28; says Coforge COFO.NS, Sagility SAGL.NS, Inventurus Knowledge INVU.NS its top picks

 (Reporting by Vivek Kumar M)

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