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MomentumDeep Value

Which IT Enabled Services Stocks Are Deep Value Picks in Week of May 31, 2026?

ACCEL

In the Week of May 31, 2026, the IT Enabled Services sector has 4 stocks that are underperforming Nifty 500 but have accelerating quarterly earnings. Average value score is 55/100 with PAT acceleration of +38pp.

Total Stocks
4
deep value
Avg Fundamental
55
/100
Top Pick
Route
Score: 62/100
Avg Margin of Safety
—

Stock Distribution

0 Strong1 Good3 Average0 Weak

Earnings & Valuation Signals

🔄

1 turnaround: Route Mobile Ltd

AI Research Summary

Sector Pulse

The IT Enabled Services sector, as observed through RPSG Ventures Ltd (RPSGVENT), is navigating a period of top-line expansion coupled with bottom-line compression. Consolidated revenue grew 11.2% YoY to INR 1,842.16 crore, yet PAT fell 12.5% to INR 42.30 crore. This divergence is primarily due to the 'higher interest and depreciation' associated with aggressive capital expenditure in digital assets and stadium infrastructure. While the IT services segment grew 9% YoY, the overall profitability was weighed down by finance costs.

Catalysts Playing Out Across the Pack

The most prominent catalyst is the value_added_product_mix_shift. Specialty IT revenue now accounts for 32% of the total IT revenue mix, contributing INR 45 crore to EBITDA. This shift suggests a move toward higher-value digital transformation work. Additionally, the new_product_or_brand_launch catalyst is active in the consumer segment, where 15 new SKUs are expected to contribute INR 80 crore in revenue by FY27, helping to narrow losses in that division to INR 12 crore this quarter.

What Managements Are Guiding

Management has reaffirmed its double-digit revenue growth target of 12-15% for FY26. However, they have lowered the PAT margin guidance from 4.5% to 3.8%, citing the 'prevailing interest rate environment and higher debt levels.' Looking further ahead, management is guiding for an EBITDA margin expansion to 13% by FY27 as consumer brands scale and losses continue to narrow.

Sub-Sector Aggregates

Key metrics for the sector include an attrition rate of 18.5%, which remains a headwind for personnel costs. The IT services revenue mix is increasingly leaning toward specialty services (32%). The aggregate net debt for the constituent has reached INR 1,450 crore, reflecting a capex intensity of INR 350 crore for the period.

Shared Risks (9-type taxonomy)

Labor risk is the most immediate concern, with attrition at 18.5% resulting in a quantified PAT impact of INR 12 crore. FX risk is also active due to USD/INR volatility, though the constituent has mitigated this by increasing hedging cover to 70%. Furthermore, the high interest rate environment poses a risk to net margins given the current debt levels.

Bottom Line

The sector exhibits steady demand for IT services and sports ventures, but the immediate outlook is tempered by the cost of debt and labor market pressures. The transition to specialty IT services is the critical factor to watch for margin recovery.

Last updated Apr 19, 2026

4 stocks in this sector

View:
Strong61/100

Firstsource Solutions Ltd

18.6K Cr
Very Overvalued
Earnings Pulse
PAT YoY
+27%
Stable
Revenue YoY
+20%
Momentum
Accelerating
▲
Average55/100

Route Mobile Ltd

3.2K CrAccel
Fairly Valued
Earnings Pulse
PAT YoY
+90%
Turnaround
Revenue YoY
-4%
Momentum
Fading
▼
Average52/100

Protean eGov Technologies Ltd

2.5K Cr
Very Overvalued
Earnings Pulse
PAT YoY
+50%
Stable
Revenue YoY
+39%
Momentum
Accelerating
▲
Average50/100

Happiest Minds Technologies Ltd

5.7K Cr
Very Overvalued
Earnings Pulse
PAT YoY
+79%
Stable
Revenue YoY
+11%
Momentum
Accelerating
▲

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Frequently Asked Questions: IT Enabled Services

Based on publicly available financial data. This is educational research, not investment advice.

How many IT Enabled Services stocks are deep value opportunities worth studying?

There are currently 4 stocks in the IT Enabled Services sector that qualify as deep value opportunities worth studying. These stocks are underperforming the market despite showing improving earnings — a classic contrarian research signal.

Which IT Enabled Services deep value stock has the highest earnings acceleration?

IT Enabled Services deep value stocks with the highest earnings growth

  • Route Mobile Ltd — PAT growth +90.0% YoY, earnings turning around (inflection up)
  • Happiest Minds Technologies Ltd — PAT growth +79.4% YoY, earnings stable
  • Protean eGov Technologies Ltd — PAT growth +50.0% YoY, earnings stable
  • Firstsource Solutions Ltd — PAT growth +27.3% YoY, earnings stable

Why are IT Enabled Services stocks underperforming despite improving earnings?

IT Enabled Services deep value stocks are underperforming despite improving earnings because the market has not yet recognized their earnings recovery. This creates a potential opportunity for patient investors

  • The market often takes 2-4 quarters to re-rate stocks after earnings improve
  • Deep value stocks typically have a negative narrative that suppresses sentiment
  • Improving earnings combined with market underperformance creates a valuation gap
  • When the market eventually recognizes the recovery, re-rating can be significant
  • This is an educational explanation of deep value investing theory.

Which IT Enabled Services deep value stocks have the highest revenue growth?

IT Enabled Services deep value stocks with the highest revenue growth

  • Protean eGov Technologies Ltd — Revenue growth +38.7% YoY
  • Firstsource Solutions Ltd — Revenue growth +19.5% YoY
  • Happiest Minds Technologies Ltd — Revenue growth +10.8% YoY
  • Route Mobile Ltd — Revenue growth -3.7% YoY

Is the earnings recovery in IT Enabled Services sustainable?

Sustainability indicators for the IT Enabled Services deep value earnings recovery

  • 1 stocks showing turnaround (inflection up)
  • A sustainable recovery shows more stocks accelerating than decelerating.

What is the margin trend for IT Enabled Services deep value stocks?

Operating margin trends across IT Enabled Services deep value stocks

  • 2 stocks with expanding margins
  • 2 stocks with stable/volatile margins

Is IT Enabled Services a contrarian opportunity worth studying?

IT Enabled Services as a contrarian opportunity — key research signals

  • 4 stocks underperforming the market (contrarian setup)
  • 1 stocks showing turnaround signals
  • Contrarian investing requires patience.

What is the typical recovery timeline for deep value stocks?

Deep value stock recovery timelines vary, but historical patterns suggest

  • 1-2 quarters: Earnings inflection detected, market still skeptical
  • 2-4 quarters: Consistent earnings improvement builds confidence
  • 4-6 quarters: Market re-rates, stock price catches up to fundamentals
  • Some stocks never recover — continuous monitoring is essential
  • Timelines are approximate and based on historical patterns.

What is deep value investing?

Deep value investing is a strategy of studying stocks that are underperforming the market despite showing improving fundamentals (earnings growth, margin expansion). The thesis is that the market has not yet recognized the earnings recovery, creating a potential valuation gap.

  • These stocks typically underperform indices like Nifty 500
  • They show positive earnings trends (PAT growth, revenue growth)
  • The market eventually re-rates them as earnings improvements sustain
  • It requires patience — recovery can take several quarters

The above FAQs are based on publicly available financial data. This is educational research only. Sector Alpha is not SEBI registered and does not provide investment advice.