Coforge, Infosys, TechM: Why MOFSL picked these 3 IT stocks amid AI uncertainty

MOFSL in a fresh note said it prefers Infosys Ltd and Tech Mahindra Ltd (TechM) among large caps and Coforge Ltd among mid cap IT stocks. The domestic brokerage believes Infosys is well-placed to benefit from enterprise-wide AI spending, given its discretionary-heavy mix and improving revenue quality, with pass-through revenue likely to stay low.  At current valuations, upside risks meaningfully outweigh downside risks, it said.

For TechM, MOFSL see signs of transformation under the new leadership and improving execution in BFSI. We believe TechM’s transformation remains relatively decoupled from discretionary spending. In mid-caps, Coforge remains our top pick. 

"We believe Coforge’s strong executable order book and resilient client spending across verticals bode well for its organic business. Encora’s acquisition expands Coforge’s presence in the Hi-Tech and Healthcare verticals. We continue to view Coforge as a structurally strong mid-tier player well-placed to benefit from vendor consolidation/cost-takeout deals and digital transformation," it said.

For IT stocks, MOFSL said valuations are not the problem anymore, but questions are being asked of the structural demand outlook. It believes a sustained re-rating will likely require clear evidence that GenAI-led spending is translating into meaningful revenue momentum, which, at present, still appears some distance away. 

For the December quarter, MOFSL said despite seasonally weak conditions in Q3, IT firms reported better-than-feared earnings. The management commentary on discretionary spending and early AI-related demand remained relatively constructive, although broader sector sentiment turned cautious following commentary from AI-native players such as Palantir and Anthropic, which highlighted accelerated AIled productivity gains, compression of implementation timelines, and potential disruption across application development, testing, and potentially ERP implementation. 

"These developments have intensified the ongoing debate around the extent and timing of AI-driven deflation vs incremental revenue opportunities from AI adoption. Among large-cap IT companies, five reported revenue beats (one in line), while margins were better than expected in three cases (three in line)," MOFSL said.

It said HCL Tech stood out in Q3 with 5 per cent YoY CC services growth and an upgrade to FY26 services guidance to 4.75–5.25 per cent CC, positioning it among the fastest-growing large-cap IT players. The revised guidance, it said, implies 1.7 per cent QoQ (5.5 per cent YoY CC) organic growth in Q4 despite seasonality. 

Infosys’ FY26 CC revenue growth guidance got upgraded to 3-3.5 per cent against 2-3 per cent earlier, which is a positive signal and an early step toward an AI-led growth inflection. The revised outlook implies 5.4 per cent YoY CC growth in Q4, providing a stronger base for FY27. 

"Tech Mahindra continues to execute well on margins, with its 15 per cent EBIT margin target for FY27E now within reach. Within Tier-2, Persistent posted 4.1 per cent QoQ CC growth, above consensus, and surprised positively on margins as AI tools embedded in delivery translated into margin gains despite wage hike pressure. Coforge reported strong growth (4.4 per cent QoQ CC) and we expect it to remain the growth leader within our coverage. We continue to expect the Tier-2 pack to outpace Tier-1 peers," MOFSL said.