Infosys gets first Morgan Stanley downgrade in four years; ADRs extend decline

US-listed shares of Infosys fell for the second consecutive day on Tuesday (March 11) after Morgan Stanley downgraded the IT firm to ‘equal-weight’ from ‘overweight.’ The brokerage, which had maintained an overweight rating for at least four years, cited concerns over slowing growth and stretched valuations. It also reduced its target price to ₹1,740 from ₹2,150, indicating a 19% downside.Infosys’ US-listed shares reacted negatively in premarket trading following the brokerage’s report, after dropping 2.1% in the previous session. “We see downside risks emerging for both the revenue growth of Indian IT services and valuation multiples,” wrote Morgan Stanley analyst Gaurav Rateria in an investor note.

Back in India, Infosys

shares dropped 2.3% in Tuesday’s trade, closing at ₹1,661.60 on the NSE, bringing their year-to-date decline to 11.6% in 2025. This drop also lowered the company’s forward earnings multiple to 23.2 times, down from the record high of 32.1 seen in December 2021.
Also Read: IndusInd Bank shares now valued at par with mid-sized PSU Banks after ₹18,000 crore sell-offDespite a weakening rupee, Indian IT stocks, including Infosys, remain under pressure due to concerns over a potential slowdown in the US economy and uncertainty surrounding US trade policy. The Nifty IT index, among the worst-performing sectoral indices after real estate, has fallen 14% so far this year. Notably, the index has delivered negative returns only once in the past eight years, with a 20% drop in 2022.

With weakening business and consumer confidence, investors remain cautious about the Indian IT sector, which heavily depends on export revenue. Notably, North America accounted for over 60% of Infosys’ revenue in FY24.

Interestingly, last week, CLSA upgraded Infosys to ‘Accumulate’ from ‘Hold,’ setting a 12-month target price of ₹1,978. Among the 35 analysts tracking the stock on Bloomberg, 75% have a ‘Buy’ rating, while seven recommend a ‘Hold,’ and five suggest a ‘Sell.’ Despite recent weakness, the consensus target price for Infosys stands at ₹2,084.64, implying a 25% upside from the last closing price.