Kotak and CLSA downgrades hit TCS, Infosys and LTM Friday, citing pricing pressure, AI-led deflation and macro headwinds as the Nifty IT index falls 1%.
IT stocks slid Friday after downgrades from Kotak Institutional Equities and CLSA hit some of the sector's biggest names, pulling the Nifty IT index down 1% to 30,337 and putting the week's loss at over 3% from last Friday's close of 31,357.
Kotak cut Infosys to add from buy, with a new target of ₹1,200, and TCS to add from buy with a target of ₹2,450. LTM, the stock page for which is here, took a harder hit – downgraded to sell from reduce, target ₹4,150, after what the brokerage called a sharp rally from recent lows.
The call from Kotak centered on four themes: pricing pressure in a market where deals can't support everyone's growth ambitions; less concern about IT services' terminal value, which puts a floor under valuations; the open-source vs. closed-model debate, with open-weight models driving faster adoption and deflation; and challengers eating into incumbents' wallet share. Kotak prefers Tech Mahindra, Coforge, Hexaware and Indegene.
CLSA, which moved earlier this week, downgraded Infosys to hold from outperform, raising its target to ₹1,147 from ₹1,109. TCS was cut to hold from outperform with a target of ₹2,326, up from ₹2,165. Tech Mahindra went to hold with a ₹1,634 target.
The brokerage cited AI-led deflation hitting legacy managed services, plus macro headwinds weighing on tech spending. It is more constructive on mid-tier names, keeping Persistent Systems at high-conviction outperform with a raised target of ₹6,246 and Coforge at high-conviction outperform with a ₹2,170 target. LTM and Hexaware maintained outperform ratings with target hikes to ₹5,534 and ₹730.
At the time of writing, LTM, Oracle Financial Services Software, HCL Technologies, Tech Mahindra and Wipro were trading in the red. TCS, Persistent Systems, Infosys, Mphasis and Coforge showed relative strength.
Infosys stock page is here and Oracle's is here. Both carry AlphaScala scores – Infosys at 57/100 (Moderate) and Oracle at 46/100 (Mixed) – reflecting mixed signals even before this week's downgrades.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.