Midcap IT Stocks to Watch: Dipan Mehta's New Playbook for Indian Investors
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, and the big names are struggling. Instead, Mehta is urging investors to be selective and focus on mid-cap IT firms and other niche sectors.
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. However, rather than turning bearish on the sector wholesale, he is advising investors to go granular and focus on specific pockets for potential gains.
### The Four Mid-Cap IT Stars to Watch
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 Ramco Systems, long an underperformer, also posted numbers that turned heads.
'The time has come for investors to get extremely selective,' Mehta emphasized.
### EV Tailwind Boosts ER&D Stocks
The West Asia oil crisis has quietly handed a lifeline to engineering R&D-focused IT companies, according to Mehta. He flagged LTI, KPIT, Tata Technologies, and Tata Elxsi as names to watch, reasoning that rising oil prices will force OEMs 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 these Tata-linked ER&D players.
### Opportunities in Specialty Chemicals and Real Estate
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.
### Caution in the Aviation Sector
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.
### The Big Picture
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.
