Synopsis: Jefferies has downgraded six major Indian IT stocks—Infosys, HCLTech, Mphasis, LTIMindtree, TCS, and Hexaware—citing AI-driven shifts in business models, increased cyclicality, and operational risks.
Jefferies Financial Group, a leading global investment bank and capital markets firm, has downgraded six major IT stocks and lowered their price targets, citing growing concerns around artificial intelligence developments. The move reflects the firm’s cautious stance on the tech sector.
The Global Broker has downgraded up to six IT stocks on the day’s trade, including Infosys, HCLTech, Mphasis, LTIMindtree, TCS, and Hexaware Technologies, cutting their price targets and lowering their EPS estimates by 1–4 percent.
Reason for the Downgrades
Jefferies highlighted that the rise of AI could fundamentally reshape the business mix of IT services companies. The shift is expected to favor consulting and implementation services, while the share of managed services may decline. Such a transition could increase the cyclicality of these businesses and require significant changes in talent strategies and operating models, adding to operational risks.
The brokerage also pointed out that, although these IT stocks have dropped up to 16% year-to-date, they still carry more downside risk than upside potential. Investors may need to factor in both the evolving market dynamics and the structural challenges posed by AI adoption when assessing these companies. Here are the stocks downgraded by Jefferies and their updated price targets:
Infosys Limited
Infosys is a Bengaluru-headquartered global leader in next-generation digital services, consulting, and AI with many employees. Founded in 1981, it enables clients in numerous countries to navigate digital transformation using cloud, AI, and data analytics.
Jefferies has lowered its rating on Infosys from “buy” to “hold” and significantly reduced its price target to Rs. 1,290, down from Rs. 1,880. The updated target suggests a potential downside of 5% compared to Friday’s closing price.
HCL Technologies Ltd.
HCL Technologies Ltd. is a leading global technology company headquartered in Noida, India, providing IT consulting, software services, and digital transformation solutions that focus on AI, cloud, engineering, and software products.
The company has been downgraded from “buy” to “hold,” with its price target reduced to Rs. 1,390 from Rs. 1,885. The revised target indicates a potential downside of approximately 4% from Friday’s closing price.
Mphasis Limited
Mphasis Limited is a leading global information technology (IT) solutions provider, headquartered in Bengaluru, India. The company specializes in providing cloud, cognitive, and artificial intelligence (AI)-driven technology services to various industries.
It has been downgraded from “buy” to “hold,” with its price target lowered to Rs. 2,450 from Rs. 3,410. Since the stock is already trading below the revised target, there is minimal upside from Friday’s closing price.
LTIMindtree Limited
LTIMindtree is a leading global technology consulting and digital solutions company, formed through the merger of Larsen & Toubro Infotech (LTI) and Mindtree. As a subsidiary of the Larsen & Toubro (L&T) Group, it combines LTI’s engineering heritage with Mindtree’s digital-first approach.
Jefferies has lowered its rating to “underperform,” with its price target reduced to Rs. 4,300 from Rs. 6,175. The updated target indicates a potential downside of 12% from current levels.
TCS Limited
Tata Consultancy Services (TCS) is a premier global IT services, consulting, and business solutions organization headquartered in Mumbai, India, established in 1968. As a subsidiary of the Tata Group, it ranks among the world’s largest IT service providers.
India’s largest IT services company has been downgraded to “underperform,” with its price target lowered to Rs. 2,350 from Rs. 3,485. The revised target suggests a potential downside of upto 13% from Friday’s closing price.
Hexaware Technologies Limited
Hexaware Technologies is a prominent global IT services and consulting firm, founded in 1990 and headquartered in Mumbai, India. It specializes in AI-powered digital transformation, cloud services, and business process automation, serving sectors like Banking, Healthcare, and Retail.
The stock has been downgraded to “underperform,” with its price target reduced to Rs. 460 from Rs. 660. The updated target indicates a potential downside of 12 percent from current levels.
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