Infosys, Coforge, Wipro, eClerx: Nomura’s IT stock picks as it rejects ‘AI loser’ fears
Nomura's preferred picks were Infosys and Cognizant (unlisted) among large caps, Coforge among mid-caps and eClerx among small caps. The brokerage retained its contrarian Buy on Wipro.
- Nov 28, 2025,
- Updated Nov 28, 2025 9:05 AM IST
Infosys, Coforge and eClerx remain Nomura’s preferred IT stock bets as the brokerage argued that worries around India’s IT services sector being a net ‘AI loser’ were overstated. Nomura said the debate was more about timing than structural displacement, noting that every major tech cycle has historically expanded the addressable market for system integrators rather than shrunk it. It maintained that IT services firms will remain central to managing complex enterprise technology stacks, a role that becomes even more critical in an AI-led environment.
Nomura said investor anxiety stemmed from the current phase of “AI deflation”, where early efficiency gains from automation are suppressing net revenue growth at a time when clients are cautious on discretionary spending. The brokerage expects revenue to rise 4.5 per cent for large caps in FY27, only a modest improvement from FY26, while mid-caps should continue to outgrow larger peers. It added that a faster rate-cut cycle and a clearer macro backdrop—especially if tariff disruptions ease—could support an earlier pickup in demand.
On the demand cycle, Nomura observed that India IT firms were investing meaningfully in AI—using AI internally, embedding AI in service lines, scaling capabilities for client programmes and deepening ecosystem partnerships. It said clients were gradually moving from proof-of-concepts to standalone deployments, but the “real revenue pools” would emerge only when full-scale enterprise adoption kicks in, something Nomura expects to accelerate over the next 12–18 months. This phase, it said, should also revive cloud and data-modernisation spending.
Nomura projected a modest margin recovery, driven by slightly firmer revenue growth and ongoing workforce optimisation. It expects FY27 EBIT margins to expand by around 30 basis points for large caps and about 50 basis points for mid-caps, even as companies continue to invest in AI capabilities.
Rolling forward valuations to 1HFY28, Nomura said sector valuations were broadly attractive but called for selectivity. Its preferred picks were Infosys and Cognizant (unlisted in India) among large caps, Coforge among mid-caps and eClerx among small caps. The brokerage retained its contrarian Buy on Wipro and kept a 'Reduce' rating on L&T Technology Services.
Infosys, Coforge and eClerx remain Nomura’s preferred IT stock bets as the brokerage argued that worries around India’s IT services sector being a net ‘AI loser’ were overstated. Nomura said the debate was more about timing than structural displacement, noting that every major tech cycle has historically expanded the addressable market for system integrators rather than shrunk it. It maintained that IT services firms will remain central to managing complex enterprise technology stacks, a role that becomes even more critical in an AI-led environment.
Nomura said investor anxiety stemmed from the current phase of “AI deflation”, where early efficiency gains from automation are suppressing net revenue growth at a time when clients are cautious on discretionary spending. The brokerage expects revenue to rise 4.5 per cent for large caps in FY27, only a modest improvement from FY26, while mid-caps should continue to outgrow larger peers. It added that a faster rate-cut cycle and a clearer macro backdrop—especially if tariff disruptions ease—could support an earlier pickup in demand.
On the demand cycle, Nomura observed that India IT firms were investing meaningfully in AI—using AI internally, embedding AI in service lines, scaling capabilities for client programmes and deepening ecosystem partnerships. It said clients were gradually moving from proof-of-concepts to standalone deployments, but the “real revenue pools” would emerge only when full-scale enterprise adoption kicks in, something Nomura expects to accelerate over the next 12–18 months. This phase, it said, should also revive cloud and data-modernisation spending.
Nomura projected a modest margin recovery, driven by slightly firmer revenue growth and ongoing workforce optimisation. It expects FY27 EBIT margins to expand by around 30 basis points for large caps and about 50 basis points for mid-caps, even as companies continue to invest in AI capabilities.
Rolling forward valuations to 1HFY28, Nomura said sector valuations were broadly attractive but called for selectivity. Its preferred picks were Infosys and Cognizant (unlisted in India) among large caps, Coforge among mid-caps and eClerx among small caps. The brokerage retained its contrarian Buy on Wipro and kept a 'Reduce' rating on L&T Technology Services.