It’s a trend that has been playing out for several quarters in the IT sector , which has also caught the attention of investors on Dalal Street. Mid-cap IT companies have reported a much faster growth in their revenues on a constant currency basis than larger peers like Infosys and HCL Tech in the June 2026 quarter (view table below). That’s because mid-cap IT companies have a strong focus on the fast growing AI-related projects coupled with recent overseas acquisitions in this segment.
Of course, readers need to keep in mind that the revenues of mid-cap IT companies are much smaller than that of Infosys and HCL Tech.
To help readers get greater insight on mid-cap IT stocks, we looked at companies with a market capitalization greater than Rs 40,000 crore and up to Rs 80,000 crore.
Here are the findings for 3 mid-cap IT companies and their performance in the June 2026 quarter.
Why Mid-Cap IT Revenue is Outpacing the Giants
The leading IT services companies had reported a broadly mediocre growth in the June 2026 quarter. For instance, Infosys, which is often regarded as the industry’s benchmark, reported a lacklustre 1% quarter-on-quarter (q-o-q) growth in constant currency terms of its consolidated revenues to Rs 48,211 crore.
Similarly, HCL Tech reported its consolidated revenues declined by 0.5% q-o-q in constant currency terms to Rs 34,579 crore in the quarter. In its key IT services division, HCL Tech has highlighted revenues declined 0.7% q-o-q in constant currency.
It’s no surprise that investors are increasingly evaluating the growth of mid-cap IT companies.
Persistent Systems: How a 90% TCV Surge Masks Rising Sub-Contracting Costs
Persistent Systems, an AI-led, platform-driven digital engineering and enterprise modernization partner, its focus on software, hi-tech and emerging industries, and healthcare and life sciences.
The company derives a very large portion of its operational income from AI-led projects for its global clients. This strategy enabled the company to grow its consolidated revenues from operations by 3.8% quarter-on-quarter (q-o-q) to Rs 4,303 crore in the June 2026 quarter. The company had declared its results on Saturday.
Persistent Systems had 28,640 employees as compared to 27, 502 employees. Nevertheless, its key employee cost as a percentage of revenues declined 150 basis points q-o-q to 51.1%. However, the company’s sub-contracting costs grew 7.4% q-o-q to Rs 667.1 crore.
As a result, Persistent Systems’ net profit shrank nearly by 8.7% q-o-q to Rs 483 crore.
A bright spot was Persistent Systems reported strong growth in TCV (new order wins) of $ 1.14 billion in the June 2026 quarter as compared to $ 600.8 million in the March 2026 quarter. The company highlighted a six-and-half-year strategic services agreement with a leading global technology company with a TCV of more than $650 million.
Mid-cap IT v/s leading IT Services companies (Q1FY27 Consolidated; QoQ Growth %))
| Operational parameters | Persistent Systems | Coforge | Mphasis | Infosys | HCL Tech |
| Consolidated revenues on constant currency basis | 3.8% | 5.2%* | 2.1% | 1% | -0.5% |
| Net profit | -8.7% | -20% | -4% | -8.6% | 3% |
| TCV | 90% | 6.6% | 13.3% | 12.5% | 24.4% |
| Employee Count | 4.1% | 29.2% | No data available | Flat | -1.4% |
Source – Company results and investor presentations
Coforge: The Encora Integration and the Price of Rapid Employee Scaling
Coforge reported constant currency growth of 5.2% q-o-q (excluded exited businesses) to Rs 5,527 crore in the June 2026 quarter. The growth was helped by the integration of the recent acquisition of California-based Encora.
New Delhi-based Coforge uses AI extensively to offer engineering and allied services for its global clients
However, its key employee expenses as a percentage of revenue from operations rose 260 basis points q-o-q to 56.5%. And that’s because Coforge had 46,228 employees as compared to 35,777 employees.
As a result, Coforge’s net profit declined nearly 20% q-o-q to Rs 531.7 crore.
Coforge’s TCV of $ 691 million in the June 2026 quarter as compared to $ 648 million in the March 2026 quarter.
Mphasis: Rising Employee Costs Squeeze Margins Despite AI Deal Flow
Mphasis has highlighted its revenues in constant currency grew 2.1% q-o-q to Rs 4,384 crore in the June 2026 quarter, and it highlighted strong growth momentum in AI-led modernisation deals.
Its key employee costs as a percentage of revenues rose 50 basis points q-o-q to 54.9%, and the company has not provided details of its employee numbers in its press release and investor presentation.
Higher employee costs resulted in its net profit declining nearly 4% q-o-q to Rs 489.5 crore.
Its TCV was $ 461 million in the June 2026 quarter as compared to $ 407 million in the March 2026 quarter, and this growth was powered by 3 deals.
The AI M&A Race: Sustaining the Mid-Cap Valuation Premium
Persistent Software had further expanded its Europe-based AI-presence with the recent acquisition of AI focussed division of Estonia-based Concise Systems OÜ. This AI focused division of the Estonia-based company had annual revenues of Euro 11.6 million (nearly Rs 125 crore) in a financial year, and investors would be closely watching the synergies Persistent Software derives over the next few quarters.
For Coforge, too, investors will be looking at synergies from its recent acquisition of California-based Encora.
In addition, investors will be closely watching mid-cap IT companies for new AI deals bagged, going forward, in a bid to justify the premium valuations of these stocks.
Valuation Reality Check: Are Mid-Caps Priced for Perfection?
Persistent Software ended 0.3% lower at Rs 5,475 on Tuesday. The stock trades at a consolidated P/E of 43.5 times. Over the 5 years, the stock has traded between 32.1 times and 81 times.
Coforge ended 1.2% lower at Rs 1,745 on Tuesday. The stock trades at P/E of 40.2 times. Over the past 5 years, the stock has traded between 26.2 times and 77.8 times.
And Mphasis ended 1.4% lower at Rs 2,382 on Tuesday. The stock trades at a P/E of 23.5 times. Over the past 5 years, the stock has traded between 20.1 times and 48.8 times.
Valuation of mid-cap IT companies with leading IT Services companies
| IT Company | Consolidated P/E |
| Persistent Systems | 43.5 times |
| Coforge | 40.2 times |
| Mphasis | 23.5 times |
| Infosys | 15.1 times |
| HCL Tech | 20.3 times |
Meanwhile, Infosys trades at a consolidated P/E of 15.1 times, and over the past 5 years, it has traded at a P/E between 14 times and 38.4 times.
And HCL Tech trades at a consolidated P/E of 20.3 times, and over the past 5 years, the stock has traded between 17.2 times and 33 times.
Clearly, mid-cap IT stocks trade at a considerable premium to leading IT services companies. Readers can put mid-cap IT stocks on their watchlist for 2026 , and closely monitor if performance matches expectations.
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
Disclaimer:
The writer and his family have no shareholding in any of the stocks mentioned in the article.
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