TCS, Infosys, Wipro see price targets slashed by Jefferies as AI shift clouds outlook

Foreign brokerage firm Jefferies has turned more cautious on Indian IT services stocks, revising its target prices for TCS, Infosys, HCLTech, Wipro and Tech Mahindra, while maintaining its preference for Coforge and HCL Technologies over larger peers.

The rationale for the cautious view stems from what Jefferies calls “AI-led disruption” combined with a slower-than-expected revival in global tech spending.

Jefferies continues to rate Wipro and Tech Mahindra as its least preferred picks, reiterating an “Underperform” call on both. Infosys and HCLTech have been rated “Buy”, while TCS is on “Hold”.

The brokerage has lowered its price target for TCS to Rs 3,230 from Rs 3,480, citing valuation concerns despite the company’s leadership position. Infosys’ target price has been revised down to Rs 1,750 from Rs 1,860, though Jefferies has retained a “Buy” rating, indicating relative confidence in its ability to ride out current headwinds.

HCLTech also remains a preferred large-cap with a “Buy” tag, though its target has been cut to Rs 1,680 from Rs 1,850. Among laggards, Wipro’s target has been trimmed to Rs 220 from Rs 235 and Tech Mahindra’s to Rs 1,315 from Rs 1,400, with both continuing to carry a bearish stance.

While generative AI presents long-term opportunities, the brokerage believes that in the near term, these deals are small, margin-dilutive, and far from offsetting the broader softness in demand for traditional services. It also noted that Indian IT players are still lagging in AI capabilities and are heavily dependent on external platforms, limiting their ability to differentiate.Jefferies observed that the large deals being signed are largely focused on cost takeouts, with higher scrutiny from clients and longer conversion cycles. It flagged weak discretionary spending, delayed decision-making, and pricing pressure as persistent themes across the sector. Even in FY26, it expects growth to remain in the low single digits for most players.Also read:Oracle’s $244 billion single-day rally as big as entire IT trinity of TCS, Infosys, HCL Tech

While some recovery is anticipated, Jefferies noted that current valuations, especially for large caps, already bake in a fair degree of optimism, leaving little room for upside. As such, the firm prefers selective exposure through stocks like Coforge and HCLTech, which are better positioned in terms of digital capabilities and deal wins. Overall, the tone remains cautious, with investors advised to stay selective amid a sector undergoing structural shifts.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)