Indian IT companies have been among the most neglected segments in this market cycle. The key rea…

Indian IT companies have been among the most neglected segments in this market cycle. The key reasons are weaker growth and limited visibility, along with the absence of the “AI froth” that has boosted global tech valuations.

This is not the first time such skepticism has emerged. A similar phase played out in 2016–2017, when clients shifted from traditional outsourcing to digital and cloud. Investors worried about disruption, and margins and growth did weaken. But Indian IT firms adopted these technologies, tweaked delivery models, and returned to a steadier growth path.

Businesses evolve, and legacy sectors like IT services have done so repeatedly. The AI-led transition may look distant today, but it is early to doubt their ability to adapt.

Even after the recent derating, the sector still shows solid ROEs, disciplined capital allocation and reasonable valuations, which makes it relatively attractive versus the broader market. A 15% or so price fall can make this sector attractive on an absolute basis. Till such times a systematic investing approach seems logical.