Market veteran Dipan Mehta, Director at Elixir Equities, has a blunt message for investors still betting on India's IT giants: the AI disruption is real, the big names are struggling, and the winners this earnings season are names most retail portfolios don't even hold.
Speaking to ET Now, Mehta said large-cap IT services companies are finding the AI transition "very-very challenging," with projects shrinking in size and margins under pressure. But rather than turning bearish on the sector wholesale, he is urging investors to go granular, and fast.
IT stocks snap three-day rally, plunge over 5% in sharpest fall in nearly four months
The four names Mehta is watching
Four mid-cap IT services companies stood out to Mehta this earnings season for outperforming in what he called a "highly uncertain environment": Coforge, Happiest Minds, Fractal Analytics, and Persistent Systems. On the product side, Oracle and a surprise returnee , Ramco Systems, long an underperformer, also posted numbers that turned heads.
IT stocks crash! Planning to buy the dip? Here's what analysts say
"The time has come for investors to get extremely selective," Mehta said.
EV tailwind hands ER&D stocks a second look
The West Asia oil crisis, Mehta argues, has quietly handed a lifeline to engineering R&D-focused IT companies. He flagged LTI, KPIT, Tata Technologies, and Tata Elxsi as names to watch, reasoning that rising oil prices will force OEMs that had gone slow on electric vehicle development to urgently revisit their EV roadmaps.
"Before the Iran war, EV was kind of losing ground even in Europe and the US," Mehta noted, adding that consumer demand and EV sales as a share of total auto sales are now both trending upward. A revival in auto R&D spending would be a direct tailwind for all three Tata-linked ER&D players.
Specialty chemicals, real estate, and one aviation warning
Beyond IT, Mehta is quietly building conviction in specialty chemical stocks, particularly those with high export exposure that benefit from a weaker rupee. After two to three years of stagnant earnings, he believes an upcycle is beginning to form — with several companies having already expanded capacity to global scale.
On real estate, he remains a long-term bull despite muted Q4 pre-sales numbers, with a particular callout for co-working space operators like Awfis, which he described as a "superb niche" within the broader real estate play.
Aviation, however, is a different story. Mehta said his conviction in IndiGo — the sector's only meaningful listed player — is "dissipating by the day," citing its sensitivity to the rupee, continued earnings volatility, and the risk that passenger volume growth will disappoint. His advice for investors with no aviation exposure: wait and watch.
With FII selling continuing to pressure Indian markets and the Iran conflict stretching investor patience, Mehta's message is clear; macro uncertainty is not going away soon, but selective stock-picking in the right pockets of IT, chemicals, and real estate can still deliver. Broad sector bets, especially in large-cap technology, carry more risk today than most investors are pricing in.
