AI is killing margins – Which IT stock still has growth potential?

Описание: Artificial Intelligence is reshaping India’s IT sector at breakneck speed. In this episode of Bottomline by Groww, we dive deep into how mid-cap pioneer Coforge Ltd and agile small-cap leader Happiest Minds Technologies Ltd are navigating AI-driven disruption. As traditional headcount-based billing models give way to outcome-driven solutions, these two companies showcase contrasting strategies to capitalize on digital transformation and AI innovation.

Coforge Ltd has defied macro pressures by leveraging its four-decade legacy to deliver end-to-end software services across BFSI, travel, and logistics. With a record $3.55 billion order book in FY25—up 75% YoY—and a diversified client base including British Airways and ING Group, Coforge’s focused sales strategy and AI-led solutions have fueled 31% revenue growth and 12% net profit increase in the last fiscal year.

On the other hand, Happiest Minds Technologies Ltd, despite a stellar 24% revenue CAGR over five years, has struggled with profit conversion and margin pressure. Heavy investments in Generative AI, infrastructure management, and recent acquisitions have driven sales up 27% YoY but squeezed net margins from 15% to under 9%. A delayed payment from a major US client and rising interest costs have further challenged its bottom line.

Key takeaways for investors: AI is the new battleground in the Indian IT race. Companies that embed AI-driven automation into large-scale projects and optimize cost management will outperform peers. Mid- and small-cap players must accelerate AI adoption to sustain growth and profitability.

Enjoyed this analysis? Subscribe to Bottomline by Groww for more in-depth insights on AI, IT stocks, and market trends. Share your views in the comments below—do you hold Coforge or Happiest Minds in your portfolio? Stay tuned for our next deep dive!

Timestamps:
0:00 - Disclaimer
0:05 - Introduction: AI in India’s IT
1:00 - Coforge: Legacy, Clients & FY25 Wins
4:11 - Happiest Minds: Growth & Challenges
7:32 - Key Takeaways for Investors
8:25 - Outro

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Name of the Research Analyst - Aakash Baid
Name of the Creator - Avanne Dubash
Date of Report: June 6, 2025
RA link - https://groww.in/pages/sebi-research-...