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IDBI Capital Report
IDBI Capital noted that the demand conditions remain steady but cautious, with clients taking longer to make decisions. While BFSI and technology sectors are seeing some recovery in discretionary spending, segments like manufacturing, automotive, and communications continue to stay weak, affecting overall growth.
The brokerage also highlighed that deal wins remain healthy, but most are focused on cost saving and vendor consolidation rather than new digital projects, which is limiting near-term revenue growth.
Concerns around GenAI disruption especially from companies like Anthropic etc are also slowing decision-making as clients assess returns and risks.
At the same time, AI presents a strong long-term opportunity, with the AI services market expected to grow significantly by 2030, improving productivity and revenue per employee. Margins are likely to improve YoY due to rupee depreciation and cost control measures like lower subcontracting and better utilization, although hedging may create some volatility.
FY2027 guidance is expected to stay modest within the guided range due to geopolitical uncertainties and pricing pressure from AI-led efficiencies. Overall, the sector is moving toward an AI-driven model, with weak near-term growth but better medium-term prospects.
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