There is a general optimism among top Indian IT players about macro and Gen AI opportunities, with discretionary spends seen picking up and the sector outlook improving, Nuvama said after hosting 14 IT services companies in its 20th annual conference.
They included tier 1 players such as Tata Consultancy Services Ltd (TCS), Infosys Ltd and Wipro Ltd, and also IT players such as Coforge Ltd, Mphasis Ltd, Birlasoft Ltd and Firstsource Solutions Ltd.
All companies, represented by their top management, gave insights into the demand environment, post-Trump volatility and FY26 (and beyond) outlook. They sounded quite optimistic about the pickup in discretionary spends and said green shoots that started from BFSI and retail segments are now likely to spread across other verticals.
"Most companies remain hopeful of a better FY26 than FY25. All along, they expect Gen AI to add incremental opportunity, over the medium to long term. We maintain positive stance on the sector and see continuously improving macro boosting growth in FY26 and beyond," they said.
Few companies are looking at broad-based growth in FY26–driven by green shoots across segments. 2025 budgets, Nuvama noted, appear to be stable or have a positive bias versus 2024.
"Margins are likely to be stable for most companies. Most companies were particularly optimistic about BFSI spends, where they expect discretionary spends from large US banks, which had been put on hold, to recover. Healthcare stays strong, and companies expect any volatility, in recent quarters, due to Trump’s re-election, to be short-lived and recover sharply," it said.
Nuvama said the midcap IT players appeared optimistic and aggressive. Coforge Ltd and Persistent Systems Ltd continue to see strong demand and growth in FY26 and beyond, across segments. Mphasis and KPIT stayed optimistic about the BFSI and auto verticals
"Conversations around Gen AI are incrementally becoming concrete versus being vague few months ago. Almost all companies talked about Gen AI projects moving from POC to live stage," Nuvama noted.
The brokerage said FY25 has turned out to be the recovery year for the sector. It now expects growth momentum to accelerate as clarity emerges on overall macro and discretionary spends revive. Moreover, it expects the mammoth opportunity led by Gen AI, to drive growth for the sector in medium to long term.
It maintained ‘Buy’ on Coforge, Infosys, Wipro, TCS, Mphasis, Persistent and LTIMindtree. The domestic brokerage remained negative on TechM and Birlasoft.