Bernstein chose Infosys Ltd. as its top pick among Indian IT companies, as it will likely lead in scale and marginal stability among large caps. Coforge Ltd. and Persistent Systems Ltd. also stand out in the small- and mid-cap sections for the fastest growth rate, the brokerage said.
It sees earnings and guidance improvement for Indian information technology companies in financial year 2026, amid outperformance of the NSE Nifty IT. The index outperformed the benchmark NSE Nifty 50 as fear of a recession in the US reduced. Earnings upgrades and guidance improvements will likely pave the way for higher revenue in financial year 2027.
After interactions with Indian IT companies, Bernstein learnt that business outlook largely remained stable, with clients not anticipating any major demand deterioration. Large deals continued to be driven by cost-effective priorities. Growth-focused deals are beginning to emerge in the pipelines.
Artificial intelligence adoption has started to give tangible gains, particularly in functions like contact centres. However, the deployment is not yet enterprise-wide, Bernstein said.
Overall demand outlook remains stable. The financial segment is showing the strongest momentum as it got support from stable-to-slightly-higher budgets, amid growth in capital markets and banking. Energy and utilities continue to see healthy growth with a robust deal pipeline, while the communication sector remains steady, Bernstein said. Demand in the manufacturing segment is subdued.
To add to brownie points for IT companies, deal activity picked up across various sectors. In the fourth quarter of financial year 2025, total contract value rose to $21.9 billion for large-cap companies, which was led by Tata Consultancy Services Ltd., Infosys Ltd., and HCLTech Ltd., Bernstein said.
The TCV ratio of large-cap to midcap dropped to 5.9 times, which is the lowest in decades, highlighting stronger mid-cap momentum, it said.
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