Weekly Recap: INFY FY2026 revenue, profit surge and Kotak downgrade

Infosys kept Q1 FY27 variable pay at 70% for employees, unchanged from Q4 FY26, due to cautious IT spending. Payouts ranged from 65% to 80% based on performance, lower than the same quarter last year. This follows mixed Q1 results with revenue up 3.9% sequentially but net profit down 8.6%. Infosys also announced salary hikes in two phases, starting in October.

NVIDIA announced a 15% price hike by year-end, causing a sell-off in AI-focused stocks and shifting investor focus to IT service companies like Infosys and HCLTech. Hexaware, with over half its revenue AI-infused, saw a significant gain, with CLSA predicting a 37% stock increase in the next year. Despite this, Infosys and Wipro remain down for 2026.

Kotak downgraded TCS and Infosys to 'Add' and LTIMindtree to 'Sell' due to AI-driven risks and pricing pressures. TCS shares fell 1.34% on the news. Investors should watch AI integration and quarterly results for margin impacts.

Kotak downgraded Infosys (target: Rs 1,200), TCS (target: Rs 2,450), and LTM (target: Rs 4,150) due to pricing pressure and AI impact, citing balanced risk-reward. Nifty IT index down 19% YTD. Kotak prefers challengers like Tech Mahindra, Coforge, Hexaware, and Indegene.

CLSA downgraded TCS, Infosys, and Tech Mahindra to Hold, citing AI's deflationary pressure and macroeconomic uncertainty. It downgraded Wipro and Mphasis to Underperform. CLSA prefers mid-tier IT companies like Persistent Systems and Coforge, seeing them better positioned for AI-driven changes. Target prices were adjusted for all mentioned companies.

CLSA downgraded five large-cap Indian IT stocks, including TCS, Infosys, Tech Mahindra, Wipro, and Mphasis, citing AI revenue growth concerns and macro headwinds. The brokerage expects AI to comprise one-third of TCS, Infosys, and HCLTech's revenue by FY2031. Price targets were adjusted slightly. CLSA upgraded mid-tier firms like Persistent Systems and Coforge.