NEW DELHI — India’s information technology services sector is showing early signs of recovery, with improving growth visibility and stronger underlying fundamentals, according to a report released Monday by BNP Paribas.
The brokerage said that while investor sentiment remains cautious, several indicators point to a gradual rebound in demand and earnings momentum.
Near-term trends are becoming more supportive, driven by increased hiring activity, steady commentary from company management, and continued growth in cloud-related revenues. A weaker Indian rupee against the U.S. dollar is also expected to support earnings across the sector.
For the March quarter, the report forecasts modest sequential revenue growth for IT companies, which is expected to translate into stronger year-over-year gains due to a favorable base.
Large-cap firms are likely to post stable performance, while select mid-sized companies could lead the next phase of growth, according to the analysis.
The report also highlighted early signs of recovery in key business segments such as technology and telecom, even as other verticals remain steady.
Margins across the sector are expected to remain resilient, supported in part by currency tailwinds.
Looking ahead, BNP Paribas projected steady revenue growth guidance from major IT firms for the 2027 fiscal year and upgraded its earnings estimates for the sector by about 2 percent for fiscal years 2027 and 2028.
The revised outlook has also led to higher target prices, reflecting increased confidence in the sector’s medium-term prospects.
The report noted strong momentum in artificial intelligence adoption, with leading IT companies expanding capabilities through partnerships with major global technology firms and launching new platforms focused on generative AI and enterprise solutions. (Source: IANS)
