In a big move indicating that the mid-cap IT space might have bottomed out, Motilal Oswal Mutual Fund (MOAMC) has bought 3,50,000 shares of Coforge, a mid-tier IT services company, in an open market transaction. The deal was done on 17 April 2025 and was worth INR 231.18 crore, at a weighted average price of INR 6,605.13 per share, as per NSE bulk deal data.

With this purchase, Motilal Oswal’s holding in Coforge has gone up from 8.06% to 8.58%, a big thumbs up to the long term story of the company. This comes at a time when there are several strategic and market developments that suggest a trend reversal in the IT space which has been beaten down in the last few months due to geopolitical pressures and macroeconomic uncertainties. There is a bloodbath in the Indian IT sector, possibly due to AI Adaptation, US tariff war and sluggishness of global IT landscape. Many big IT companies in India have tanked more than 20% in the last 60 days: Persistent System (down by 29%), Infosys (down by 25%), HCL Technologies (down by 16%) and Tech Mahindra (down by 21%)

Sector in Focus: IT Midcaps Ready for Rebound?

The Indian IT sector, particularly midcap names like Coforge, Persistent Systems, and Mphasis, had been under intense selling pressure following the 3 April announcement of reciprocal tariffs imposed by the Trump administration. Coforge’s stock plunged 8% on that day, part of a broader 17% YTD decline in the Nifty IT Index.

However, market analysts now believe the worst may be over. Despite initial fears, the tariffs do not directly target IT services. A note from Jefferies clarified that indirect effects from slower global GDP growth could weigh on demand, especially in verticals like manufacturing and retail. Still, this seems largely priced in, and brokerage houses including JPMorgan have highlighted Coforge among their top picks for a relief rally in the sector.

Coforge: Recovery in Motion

Coforge has demonstrated remarkable resilience in recent trading sessions:

• 15 April 2025: Shares surged 3.3% following a two-day decline, indicating potential trend reversal.
• 17 April 2025: The stock jumped 3.78% to close at INR 6,650, slightly above the purchase price paid by Motilal Oswal MF. In intraday trade, it even touched INR 6,655.50, marking a 4% gain.
• Over the past year, Coforge has climbed 23.4%, outperforming the BSE IT Index, which fell 6.4% during the same period.

Yet, technicals indicate short-term caution — the stock continues to trade below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. This divergence between price action and underlying moving averages could signal accumulation by institutional investors ahead of a potential breakout.

Strong Financials, Strategic Acquisitions

Coforge’s robust financials further strengthen the bullish thesis:

• Q3 FY25 (Dec 2024): Net profit rose 5.4% YoY to INR 255.9 crore. Revenue grew an impressive 42.8% YoY to INR 3,318.20 crore.
• FY24: The company reported a 12.1% growth in net profit and 14.5% growth in revenue, ending the year with INR 835.6 crore in profits and INR 9,179.00 crore in revenues.
• The stock is currently trading at a P/E ratio of 51.9, reflecting investor optimism despite sectoral headwinds.

Coforge is also actively expanding its global footprint. On 4 March 2025, its board approved two key acquisitions:

• Rythmos Inc. in the U.S., enhancing capabilities in advanced technology solutions.
• TMLabs Pty Ltd in Australia, deepening presence in the Asia-Pacific region. The latter acquisition was completed on 17 April 2025, the same day as Motilal Oswal’s stake increase, possibly influencing investor sentiment positively.

Conclusion: Tariff Tantrums Waning, Midcap IT Poised for Upside

Motilal Oswal MF’s strategic buy into Coforge signals growing institutional conviction that the IT sector’s worst phase might be behind it. With the tariff shock priced in, global IT budgets stabilizing, and a renewed focus on digital transformation, midcap IT firms like Coforge are primed for a re-rating.

Furthermore, with broader indices like the BSE Sensex up 7% YoY and small-cap stocks leading current rallies, sector rotation into undervalued IT plays may gain momentum. For investors seeking quality names with global exposure, solid earnings growth, and institutional backing, Coforge may be worth a closer look.

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Disclaimer: This article is for informational purposes only and not investment advice. Always consult a financial advisor before making decisions.