InvestorQ : Why did many mid-tier IT companies like Mindtree, Birlasoft and Persistent perform so well in the year 2021?
diksha shah made post

Why did many mid-tier IT companies like Mindtree, Birlasoft and Persistent perform so well in the year 2021?

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5 months ago
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It is well known that most of the Indian IT companies were big beneficiaries of the COVID period and that is evident from stocks like Infosys and Wipro more than doubling in the last one year. However, the big performers in the IT space were the midcap IT stocks that literally stole a march over the others. In fact, some of these mid-sized IT companies rallied as much as 500% in 2 years. What exactly has driven these mid-tier IT companies.

In fact there are a number of factors at play. For example, attractive valuations, revenue outperformance, big demand focus and large investors moving out of richly valued large cap IT stocks helped the story. Typically, these mid-tier IT companies have a market cap in the range between Rs.5,000 crore and Rs.20,000 crore. Some of the big gainers of the last 2 years in the mid-cap IT space were Mindtree, Persistent Systems, KPIT and Birlasoft.

For example, if you look at the companies like KPIT, Birlasoft and Persistent, they are up 400-500% in the last 2 years. Then there are the likes of L&T Infotech, Mphasis, LTTS and Coforge which gained over 200% in last 2 years. One reason was that most of the mid-cap IT companies were at steep discount to the large caps and are beneficiaries of strong demand. They have also adapted nimbly to the new age demand for digital services.

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