BNP Paribas analyst Kumar Rakesh has cautioned investors against viewing largecap Indian IT stocks as a straightforward value play. He points to weak FY27 guidance, AI-led disruptions, and stalled client spending as major challenges. Buybacks and dividends offer some support, but earnings risks remain high.
Kumar Rakesh, an analyst at BNP Paribas, issued a reality check on the narrative that largecap IT stocks represent a value investment. He highlighted weak guidance for FY27, ongoing AI disruptions, and sluggish enterprise tech spending as key factors undermining the sector's appeal, according to coverage in The Economic Times. Client spending has stalled amid these pressures, challenging the sector's growth outlook. Rakesh noted impacts from the Middle East on the IT industry as an additional concern. Despite these headwinds, the analyst acknowledged that buybacks and dividends provide a measure of support for investors. Earnings risks, however, stay elevated, prompting Rakesh to stress the importance of selective stock picking. This approach, he argued, is crucial in navigating the uncertain environment facing Indian IT services growth and largecap valuations.