- Motilal Oswal sees AI-driven transformation accelerating in the Indian IT sector
- Partnerships between LLM providers and IT majors signal emerging AI services layer
- IT sector has bottomed out, poised for multi-year growth driven by generative AI
While near-term demand remains muted due to furloughs and deferred deals, the groundwork for AI-led transformation is accelerating. Partnerships between leading LLM providers like OpenAI and Anthropic with IT majors such as Accenture, Cognizant, and HCLTech signal that the AI services layer is taking shape, reaffirms Motilal Oswal in this report.
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Motilal Oswal Report
Motilal Oswal has reaffirmed its bullish stance on the Indian IT sector, citing early signs of an enterprise-level AI services inflection and strategic partnerships between global tech giants and system integrators. The brokerage believes the sector has bottomed out and is poised for a multi-year rerating, driven by generative AI (GenAI) adoption.
Motilal Oswal's top picks to play the next AI wave: Hexaware and Coforge in mid-tier and HCLTech and Tech Mahindra in large-caps.
Valuation and View
Motilal Oswal believes that the IT sector has reached its bottom, with risks now skewed toward the upside. Current valuations are considered to have already factored in the prevailing status quo, including GenAI-led deflation and muted demand. Analysis indicates that if the anticipated recovery unfolds as expected, significant gains could be realized.
Growth estimates have been upgraded to reflect this outlook, with improvements projected to start appearing in reported numbers during the second half of FY27 and to take full shape by FY28 as enterprises transition to full-scale AI deployments.
In line with this, target prices have been rolled over to FY28E EPS, and valuation multiples have been raised by approximately 20%.
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