Generative AI viewed as growth driver, not threat, for medium IT companies

A fresh brokerage analysis highlights that generative artificial intelligence is expected to act as a catalyst for medium‑sized IT firms rather than a disruptive threat.

While global geopolitical tensions and a softening macro environment have placed pressure on investor sentiment, the report stresses that the core demand for IT services remains stable.

The IT index’s 26 % decline over the past nine months has been linked to worries about platform‑centric AI disruptions and uncertainty in the Gulf market, yet the note maintains an optimistic stance for the sector.

Mid‑size players are considered agile enough to integrate AI capabilities into their service portfolios, unlocking new revenue channels and enhancing existing offerings.

Operational efficiency gains and tighter cost controls are projected to lift profit margins across the board. Although a few firms could adjust revenue forecasts, margin guidance is unlikely to undergo significant revisions.

The research also updates its currency outlook, moving the expected USD‑INR rate from ₹93 to ₹95 per dollar, and applies FY2028‑29 average price‑to‑earnings multiples for valuation purposes.

In the longer run, sustained demand for digital transformation initiatives and AI‑driven solutions should provide a robust growth platform for the IT services industry.