Initiating coverage on mid-cap IT: In search of an AI breakthrough

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Initiating coverage on mid-cap IT: In search of an AI breakthrough

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India IT Services

Initiating coverage on mid-cap IT: In search

of an AI breakthrough

Initial Opinion

The ABS framework for assessing next leg of returns… 25 June 2026

Mid-cap India IT has delivered strong returns over the past decade, driven by leadership Equity

upgrades that aided in market participation vis-a-vis larger peers. Our initiations on India

Coforge, Mphasis, LTM and Persistent focus on the ABS framework to assess the next IT Services

leg of return potential: AI-strategy progress, Balance sheet discipline, and Scalability Kunal Tayal >>

(ABS) on the basis of business moat. Given the AI-led changes in the marketplace and Research Analyst

mid-cap valuations being at a premium to large-caps, we also assess scenarios that BofAS+91 22India6632 8663

could determine their growth vs. the larger peers. kunal.tayal@bofa.com

Jatin Kalra, CFA >>

…drives our rating spread for mid-cap IT ResearchBofAS IndiaAnalyst

In part driven by our framework, we initiate on Coforge with a Buy (a well-rounded +91 22 6632 8390

jatin.kalra3@bofa.com

profile of sales strength, disciplined execution, M&A success). We rate Mphasis as

Neutral, expecting a ‘show-me’ phase over next 6-12months of payoff from recently

articulated AI strategy and stability in cash metrics. Persistent has been a stand-out Coforge: A jack of several trades

company in the context of scaling up to c.$2bn revenue; but the bar for its next phase of poised to shine in low growth

growth is very high at its current valuation ; likewise for LTM. Rate Persistent, LTM as industry phase. Initiate with Buy.

Underperforms on demanding next triggers.

Persistent Systems: Differentiated