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Despite headwinds in the Indian IT sector, Coforge and Persistent Systems are outperforming peers with strong revenue growth, AI-led innovation, and margin resilience. Here’s a detailed analysis of how these two companies are breaking barriers in FY26.
2 Fastest Growing IT Stocks in India Defying Sector Headwinds: Coforge & Persistent Systems
🧭 Introduction: Indian IT Faces Headwinds, But Two Companies Are Powering Ahead
The Indian IT industry — once the darling of global outsourcing — is now navigating turbulent waters.
Muted client demand, delayed deal ramp-ups, vendor consolidation, and tighter tech budgets have created a tough environment. Rising on-site costs, visa fee hikes, and currency volatility have further squeezed margins.
Add to that the rise of Generative AI, which is rewriting traditional “billable headcount” business models, forcing companies to redefine delivery models and upskill at scale.
Yet, amid these headwinds, two IT companies — Coforge and Persistent Systems — have defied the odds, posting sector-leading growth and demonstrating resilience that’s earning investor attention.
Let’s dive deep into their financials, strategy, and why they stand out in a sluggish IT landscape.
🚀 1. Coforge: Engineering-Led Growth Defying Gravity
Performance Snapshot
Coforge (formerly NIIT Technologies) has quietly become one of the most consistent outperformers in the mid-cap IT space.
In Q1 FY26, the company posted a 56.5% year-on-year revenue growth — one of the highest among Nifty IT peers.
Here’s the growth story in numbers:
| Metric | YoY Growth | FY26 Q1 Value |
|---|---|---|
| Revenue | +56.5% | ₹3,689 crore |
| Operating Profit | +87% | ₹577 crore |
| Operating Margin | ↑ 300 bps | 16% |
| Net Profit | +156% | ₹356 crore |
| Net Margin | – | 9.7% |
This growth was led by strong demand in its travel, healthcare, retail, and hi-tech verticals, with the travel segment alone surging 31% sequentially.
Business Segments: Engineering-Led Transformation
Coforge’s growth engine is powered by three high-margin verticals that together account for 83% of total revenue:
- Engineering Services – Modernizing and migrating enterprise platforms to the cloud, redesigning legacy systems, and embedding AI automation.
- Data & Integration – Linking data ecosystems across departments to create unified digital platforms.
- Cloud Infrastructure Management – Maintaining multi-cloud systems with a focus on security, uptime, and cost optimization.
This shift towards engineering and cloud-driven digital transformation has placed Coforge at the intersection of technology and business modernization — a sweet spot for enterprise clients.
Geographical Mix
Coforge derives 54% of its revenue from the US, up from 48% in FY24, signaling growing traction in the largest IT market globally.
Europe, the Middle East, and Africa contribute another 33%, with the rest coming from Asia-Pacific.
Balance Sheet and Financial Efficiency
FY25 marked one of Coforge’s most aggressive growth years in terms of scale-up and balance sheet expansion:
- Net worth: Jumped from ₹3,565 crore to ₹6,312 crore
- Borrowings: Increased from ₹726 crore to ₹1,007 crore (to fund acquisitions and working capital)
- Other liabilities: Rose significantly due to new acquisition provisions and employee benefits
- Fixed assets: Grew from ₹2,353 crore to ₹6,196 crore — signaling heavy reinvestment in digital infrastructure
- Operating Cash Flow (CFO): Up 36% YoY thanks to higher receivables turnover and improved working capital
Coforge also signed five large deals worth $500 million, pushing its 12-month executable order book to a record $1.55 billion (up 47% YoY).
AI-Led Transformation
Management credits much of this performance to early adoption of AI-driven tools.
Its proprietary platforms — ForgeX and AgentSpire AI — are already driving automation and service efficiencies for clients across verticals.
CEO Sudhir Singh recently emphasized that FY26 is positioned to be “another exceptional year” with targeted EBIT margins of 14%.
However, investors should note one key watchpoint:
Return on Capital Employed (ROCE) fell from 29% in FY24 to 20% in FY25, as capital intensity increased faster than returns.
Coforge Verdict: High Growth, Watch Efficiency
Coforge is executing impressively on revenue and margin expansion, with strong AI positioning.
The only near-term caution is its lower ROCE compared to peers, which could improve once the new investments start yielding full returns.
Investment View: Bullish on growth and deal momentum, moderate on valuation efficiency.
Key Monitor: Margin sustainability and ROCE recovery.
💻 2. Persistent Systems: Consistent Performer in an Inconsistent Sector
Growth Consistency
If Coforge is the sprinter of the IT pack, Persistent Systems is the marathoner — delivering steady 20–25% growth every quarter for the past year.
| Metric | YoY Growth | FY26 Q1 Value |
|---|---|---|
| Revenue | +22% | ₹3,334 crore |
| Operating Profit | +35% | ₹620 crore |
| Net Profit | +39% | ₹425 crore |
| Net Margin | – | 12.8% |
Persistent’s strength lies in its balanced client portfolio and deep domain partnerships across cloud, AI, and software engineering.
Service Portfolio
Persistent operates across three primary segments:
- Software & Hi-Tech – Focused on digital modernization, product engineering, and platform development.
- BFSI (Banking, Financial Services & Insurance) – Grew 31% YoY, led by modernization projects for global banks.
- Healthcare & Life Sciences (HLS) – Jumped 56% YoY, contributing 27.3% to total revenue.
The company’s AI-engineering platform, “Saasva 3.0”, is now driving multiple generative AI use cases in BFSI and healthcare — two of the most data-rich, compliance-driven sectors.
Partnership Ecosystem
Persistent has established strategic alliances with major players like Salesforce, AWS, and Google Cloud.
These partnerships allow it to provide integrated, accelerator-based solutions — enabling faster digital transformation for enterprise clients.
Financial Highlights
Persistent’s fundamentals remain among the strongest in the mid-cap IT universe:
- Reserves: Increased from ₹4,881 crore to ₹6,241 crore in FY25
- Borrowings: Fell sharply from ₹451 crore to just ₹31 crore — signaling strong internal cash generation
- Fixed assets: Increased from ₹2,221 crore to ₹2,554 crore, indicating measured capacity expansion
- Operating cash flow: Rebounded sharply, reflecting high cash conversion and strong collection efficiency
Order Book & Outlook
The company ended the quarter with:
- Total Contract Value (TCV): $520.8 million
- New Bookings: $337 million
- Annual Contract Value (ACV): $385 million
Persistent is targeting a CAGR of 19–20% to reach $520 million in annual revenue by FY27.
However, there’s one caution: client concentration risk has increased, with the top 10 clients now contributing 42% of revenue.
This could expose earnings to potential client-specific slowdowns or budget cuts.
Persistent Verdict: AI-Ready and Fundamentally Strong
Persistent stands out for its consistent execution, clean balance sheet, and AI-forward roadmap.
Its domain depth in BFSI and HLS — two recession-resistant verticals — gives it an edge over peers.
Investment View: Strong buy on dips for long-term investors.
Key Monitor: Client concentration risk and margin sustainability.
🔍 Comparative Snapshot: Coforge vs. Persistent
| Parameter | Coforge | Persistent Systems |
|---|---|---|
| FY26 Revenue Growth | +56% YoY | +22% YoY |
| Net Profit Growth | +156% YoY | +39% YoY |
| EBIT Margin | 16% | 18% |
| ROCE | 20% (↓ from 29%) | 29% |
| AI Initiatives | ForgeX, AgentSpire AI | Saasva 3.0 |
| Risk | High capital intensity | Client concentration |
| Outlook | Aggressive growth, scaling mode | Steady compounding, AI-led |
Both companies are proof that execution strength beats macro headwinds.
While Coforge is leveraging scale and vertical diversification, Persistent is doubling down on AI-driven domain expertise.
🧩 Key Takeaways
- The Indian IT sector may be under pressure, but not every company is slowing down.
- Coforge is rapidly scaling its global presence and building AI-led platforms for the future.
- Persistent Systems continues to deliver steady growth with a high-quality balance sheet and strong partnerships.
- Both companies are positioning themselves to benefit from the next wave of digital transformation — powered by cloud, data, and AI.
🔎 SEO FAQ
Q1: Why is the Indian IT sector under pressure?
Because of muted client demand, vendor consolidation, tighter tech budgets, and rising on-site costs.
Q2: Which IT companies are outperforming despite headwinds?
Coforge and Persistent Systems are currently among the fastest-growing IT companies in India.
Q3: What drives Coforge’s growth?
Strong execution in engineering services, cloud management, and AI-led modernization.
Q4: Why is Persistent Systems considered a steady compounder?
Its diversified portfolio, minimal debt, and partnerships with AWS, Google, and Salesforce ensure sustained growth.
Q5: Is generative AI impacting IT companies?
Yes, it’s forcing IT service firms to shift from headcount-based revenue models to IP-driven, automation-based solutions.
🧠 Conclusion: Execution is the New Moat in IT
In a sector clouded by uncertainty, Coforge and Persistent Systems have shown that adaptability, domain expertise, and AI integration are the new moats.
Their strong deal wins, improving profitability, and focus on AI-first service delivery mark them as leaders of the next IT growth cycle.
As the industry evolves, these companies remind investors of a timeless lesson:
Markets reward not just innovation, but the ability to execute it profitably.
Disclaimer: This article is for educational purposes only and should not be considered financial advice.As always, do your own due diligence and consult a financial advisor before investing.
Investment in securities markets is subject to market risks. Please read all related documents carefully before investing.
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