Midcap IT likely to see better H2, AI-led deflation weighs on FY27 growth: Anand Rathi

India’s midcap IT services sector could see improved deal conversion and operating leverage in the second half of FY27, but revenue growth is likely to remain muted through the year as AI-led deflation, geopolitical disruptions and delayed deal ramp-ups weigh on near-term performance, according to brokerage firm Anand Rathi Shares and Stock Brokers.

Anand Rathi remains “cautiously positive” on the sector, with execution-focused midcap IT companies expected to benefit from vendor consolidation and cost-take-out deals. However, tech-focused midcaps could face pressure as hyperscalers prioritise cost savings amid large AI and data-centre capital expenditure.