IT slowdown? These five stocks haven't heard of it.

Mint

6 hours ago

Think Indian IT is slowing down?
Well, think again.
While headlines continue to buzz about the challenges that old-age IT companies face, some agile players are far from reaching their peak.
Forget the old image you have of IT companies – today's fastest-growing Indian IT firms are capitalising on the exploding demand for AI, cloud computing, cybersecurity, and overall digital transformation.
We're not talking about the giants here. A mix ofagile mid-size players and innovative small caps are grabbing market share and growing revenue at breakneck speed.
Without further ado, here are the five fastest-growing IT stocks in India.
#1 Persistent Systems
Persistent Systems is a global technology company that provides a range of software and technology services with a focus on AI-led, platform-driven digital engineering and enterprise modernisation. It leverages innovative platforms like SASVA, its AI-powered platform, to drive productivity and automation across the application development lifecycle.
The company grew revenue at a compound annual growth rate (CAGR) of 28% over the past three years and net profit at a CAGR of 28%. The return on equity (ROE) over this period was 25%. The market aptly rewarded the company for this performance.
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Looking ahead, Persistent Systems' management is optimistic about sustaining progress to touch $2 billion of annual revenue by FY27. This is an aspiration rather than a firm guidance but the company is well on its way.
In terms of profitability and margins, Persistent Systems has an aspirational target of improving its operating margins by 2-3% as it approaches the $2 billion revenue target by FY27.
Key levers for margin expansion include maintaining high utilisation that could remain elevated during periods of uncertainty, and pricing levers to gain incremental revenue benefits. Strategically, the company is deeply focused on AI-led transformation.
#2 Newgen Software Technologies
Newgen Software Technologies provides an enterprise-wide unified low code digital transformation platform, NewgenONE, that's designed to digitise content, automate processes and enhance omnichannel customer engagement.
The company's offerings include contextual content services (ECM) with OmniDocs, low code process automation (BPM) with iBPS, and omnichannel customer engagement (CCM) with OmniOMS.
Newgen also incorporates artificial intelligence/machine learning for data science and intelligent document processing (IDP Studio) to streamline data-to-insights development and automate information extraction.
Recently, Newgen launched genAI-powered AI agents such as LumYn (growth intelligence), Harper (conversion intelligence), and Marvin (productivity), focusing on leveraging AI to boost productivity, decision quality, and employee engagement.
The company has delivered a top-line growth of 24% CAGR over the past three years period and net profit growth of 25% CAGR. The ROE averaged 22% over this period.
The company expects to maintain its growth momentum in the coming year, aiming to surpass its historical growth rates, which have consistently been around 20%.
License revenues, which saw a 41% YoY growth in FY25, are expected to generate further downstream annuity revenues.
While the annuity revenue mix temporarily decreased due to delays in large deals, management expects to restore a healthy annuity growth rate by Q3-Q4 of FY26, as these larger projects reach completion and support revenues begin to kick in.
In terms of profits and margins, Newgen typically operates in a higher growth mode, front-loading costs, and expects margins to expand if revenue growth surpasses 20%. Conversely, if growth falls below 17-18%, margins might flatten or contract.
Management is confident in managing margins and does not foresee a significant challenge unless there is an unexpected dip in revenue.
#3 Latent View Analytics
Latent View Analytics is focused on providing data and analytics services. In terms of technology and innovation, it has made significant strides in GenAI and Agentic AI, which accounted for 8-10% of its total work in the past year, with expectations that it will rise to 16% of confirmed and open opportunities in the coming year.
The company has delivered a top-line growth of 28% CAGR over the past three years and a net profit CAGR of 16%. The ROE has averaged 13%.
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LatentView Analytics' management aimed to double revenue from $100 million to $200-220 million in the next three years. For FY26, the company has good visibility for 18-19% revenue growth.
Management reported that the current book of confirmed work plus high-probability extensions already exceeds $100 million, which is more than its revenue from the previous financial year, providing a strong base for its FY26 growth projections.
LatentView aims to maintain the Ebitda margin at 23% for FY26. The long-term expectation is that once the company hits $200 million of revenue, Ebitda margins should be higher than 25%.
#4 Nucleus Software Exports
Nucleus Software Exports is a software company that specialises in providing enterprise software. Its core offerings include products for retail lending and transaction banking.
The company is developing AI-enabled product innovations across all product lines. It's embedding AI into the day-to-day work of its engineers rather than building it as a separate, out-of-box solution.
The company serves financial institutions, including both tier-1 and t-2 banks. It has a strong market presence in the Middle East, where seven of the top 10 banks are its customers. It also operates in Australia.
Nucleus Software is strategically focused on North America for a very specific line of business, lending platforms, and is building traction in this market.
The company delivered top line growth of 19% CAGR over the past three years and a net profit CAGR of 84%. The ROE averaged 22% over this period.
Nucleus Software has a pending order book exceeding ₹60 crore. While the services portion of this order book is not known, 14-15% of its revenue typically comes from services. It's also exploring opportunities in emerging markets.
#5 Accelya Solutions India
Accelya Solutions India, specialises in providing passenger solutions in the area of settlement services, which revolves around passenger revenue accounting. It also offers audit services and industry services. The company's flagship product for these services is Revera.
It offers its solutions through three models: license, hosted, and fully managed or outsourced services.
Over the years, there has been a deliberate shift away from the licence model, with the primary focus now on generating recurring revenues from hosted (SaaS model) and outsourced (BPO) services.
The company has delivered top line growth of 21% CAGR over the past three years and a net profit CAGR of 40%. The ROE has averaged 18% over this period.
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The company's "next big wave" is expected from the airline industry's transformation towards a "one order" model, in which airlines will operate like modern retailers.
This shift is expected to create substantial demand for order accounting, which Accelya Solutions India is investing in and developing products for, positioning itself as the back-end fulfillment for these bundled orders. The company is pursuing pilot customers for this order accounting solution. Growth is also directly linked to increases in airline passenger volumes.
As a significant portion of the company's revenue from hosted (SaaS) and outsourced (BPO) services is transactional and thus proportional to airline activity. Low-cost carriers (LCCs) are also a potential growth area if they too adopt NDC and order accounting.
The company benefits from operating leverage due to its heavy investments in intellectual property (IP) and products, meaning costs do not increase linearly with revenue.
This is the reason for its high Ebitda margins, which have been around 43-44% for the past few years.
Conclusion
India's IT landscape is evolving rapidly and these five high-growth players are at the forefront of that transformation.
Whether it's AI-driven platforms, cloud-native solutions or deep analytics capabilities, these firms are not just keeping pace, they're defining the future.
But while the growth potential is exciting, remember that such high-growth stocks often come with higher volatility.
Therefore, it's important to conduct thorough research on financials and corporate governance before making investment decisions, ensuring they align with your financial goals and risk tolerance.
Happy investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com.