Kotak Forecasts FY26 Recovery: IT Stocks Gain Attraction Amid Market Correction
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- Indian IT services companies report subdued earnings for Q4 FY24, with analysts pushing recovery hopes to FY2026.
- Recent corrections in IT stocks have made valuations more attractive, particularly for mid-tier IT stocks.
- Q4 growth primarily driven by large and mega deals, but revenue growth guidance for FY2025 missed expectations across the board.
Indian IT services companies face a challenging outlook, with subdued Q4 FY24 earnings and recovery hopes pushed to FY2026. However, recent stock corrections present potential opportunities in mid-tier IT stocks.
Subdued Earnings and Delayed Recovery
Indian IT services companies reported subdued earnings for the fourth quarter of FY24, with muted revenue growth. Analysts have extended the outlook for weak demand and macro uncertainty, pushing recovery hopes back to FY2026. However, recent corrections in the IT stocks have made valuations more palatable, and further correction could make some mid-tier IT stocks more interesting, according to analysts at Kotak Institutional Equities.
