Infosys Ltd. has been downgraded by at least four analysts in a single day after the second-largest software exporter in India revised its annual sales forecast, intensifying concerns about disruptions caused by artificial intelligence.
According to data collected by Bloomberg, among the brokers who lowered their ratings on Monday were Axis Capital Ltd., Arihant Capital Markets Ltd., and IIFL Capital Services Ltd. Three other companies also lowered their recommendations over the weekend, leading to a consensus rating drop to 3.7 out of 5, the lowest figure since January 2024.
Such downgrades for a sector flagship threaten to undermine the nascent recovery in the Indian tech stock market, despite the Nifty IT index moving towards its best month since July. However, concerns are growing regarding high levels of debt used to finance global AI development.
Infosys's reduction in the annual sales forecast indicates that a broad recovery in IT budgets has not yet occurred. The company reported late Friday that revenue will grow by 1% to 2% in the fiscal year ending March 2027, in constant currency, which is below analyst estimates of slightly over 2%.
India's software services industry, valued at over $280 billion, is facing a downturn. Companies are curbing spending amid geopolitical crises such as the conflict with Iran, rising energy prices, and increased inflation.
Infosys shares have fallen 28% this year due to ongoing concerns about its ability to handle the impact of AI. The average target price from 44 analysts stands at 1200 rupees, and at the start of trading on Tuesday, shares plummeted by approximately 3%, reaching 1132.2 rupees.