CLSA has downgraded five largecap Indian IT stocks — Infosys, Tata Consultancy Services (TCS), Wipro, Tech Mahindra and Mphasis — in its latest review of the sector, while placing its bets on midcap peers instead, CNBC-TV18 reported.

The brokerage's outlook hinges on how quickly artificial intelligence becomes a substantial revenue driver for India's largest IT exporters. For TCS, Infosys and HCLTech, CLSA expects AI to make up one-third of their overall revenue only by financial year 2031. At present, AI accounts for 10% of revenue at TCS, 9% at Infosys and 6% at HCLTech.

Only once AI reaches that one-third mark, the brokerage added, will the three companies be able to deliver growth of 6.1%, 5.6% and 6.4% respectively — for TCS, Infosys and HCLTech — during financial year 2031.

The stakes extend beyond the affected stocks. India's IT services industry, tracked by industry body NASSCOM, is one of the country's largest private-sector employers and a major contributor to its services exports, and the sector's traditional growth engines — application development, maintenance and business-process outsourcing — have faced investor questions since generative AI went mainstream in late 2022 over whether automation expands demand for these services or pressures pricing. CLSA's projections effectively frame AI as a revenue story that matures over years rather than quarters, which leaves the companies' quarterly results and management commentary on AI-led deals as the checkpoints for whether that timeline stays on course.

Background

The five downgraded companies are among India's largest listed IT services providers and prominent constituents of the Nifty IT index. TCS, part of the Tata group, is the country's biggest IT services exporter by revenue, with Bengaluru-headquartered Infosys its closest peer, while Wipro, Tech Mahindra and Mphasis round out the largecap cohort. TCS and Infosys in particular also rank among the larger weights on the benchmark Nifty 50, which is why broker calls on the sector draw wide market attention. HCLTech, another Nifty IT heavyweight that features in CLSA's projections, was not part of the downgrade list.

Indian IT companies report on an April-to-March fiscal calendar, so financial year 2031 (FY31) refers to the twelve months ending March 2031.

CLSA, originally Credit Lyonnais Securities Asia, is a Hong Kong-headquartered brokerage and investment group owned by China's CITIC Securities.

The report was published by CNBC-TV18 Markets on August 19, 2026, with reporting credited to Reema Tendulkar and Hormaz Fatakia (@hormaz_fatakia).