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The Economic Times
Midcap IT likely to see better H2, AI-led deflation weighs on FY27 growth: Anand Rathi
According to Anand Rathi Shares and Stock Brokers, the midcap IT services sector in India is poised for improved performance in the second half of FY27, driven by better deal conversion and operating leverage. However, ongoing pressures from AI-driven deflation and geopolitical disruptions are likely to keep revenue growth subdued throughout the year. The report notes that while some segments like BFSI show consistent growth, others suffer from delays and shrinking margins.
MonitorConfidence: MediumShort term horizon
Published 24 Aug 2026, 10:30 UTC3 min read
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Summary
TL;DR
- Expectations of improved deal conversion in H2 FY27
- AI-led deflation poses risks to revenue growth
- Q1FY27 showed weak median revenue growth at 2.1%
- Margins declined to 14.7% from 15.9%
- BFSI remains a key growth area
Interesting facts
- Structural AI opportunities could support long-term growth in IT
- Firstsource reported strong BPO growth despite broader weaknesses
Coverage gaps
- Details on specific midcap companies expected to thrive in this environment.