Jefferies downgraded Infosys, HCL Technologies and Mphasis from “Buy” to “Hold”, and TCS, LTIMindtree and Hexaware from “Hold” to “Underperform”. It expects these stocks to fall between 2% and 18%.
Agenciesjefferies prefers Mid-sized Cos to Big Ones
On Monday, the Nifty IT index fell nearly 1.4%, extending its recent decline as the benchmark Nifty ended 0.6% higher.
“We prefer mid-sized IT firms as they should grow faster due to better ability to pivot faster to new opportunities,” said the brokerage in its client note. Jefferies’ top picks are Coforge, Sagility and IKS(Inventurus Knowledge Solutions) and forecast returns of 19-26% for these stocks.
The brokerage’s analysts said while third-quarter results led to earnings upgrades for nearly all IT firms, recent AI developments have raised concerns about the medium- to long-term growth outlook.
“This suggests that stock performance will more likely be tied to the longer-term business outlook rather than earnings delivery in the near term.”