Oracle Financial Services bucks IT rout in CY26; rises 16% while peers fall

Oracle Financial Services Software (OFSS) has emerged as the sole outperformer in the Nifty IT pack in calendar year 2026 so far, gaining 16 per cent year-to-date (YTD), even as the sectoral index has fallen nearly 28 per cent, according to ACE Equities data.

 

Analysts attributed OFSS’s outperformance to its product-led banking software business, which generates sticky, annuity-like revenues and provides better pricing power than traditional IT services firms. In contrast, the broader Nifty IT index has remained under pressure amid weak discretionary spending, AI-led disruption, pricing pressures, and uncertainty over future growth prospects for conventional IT services companies.

 

 

Nine of the 10 Nifty IT constituents have posted negative returns this year. LTIM has been the worst performer, down around 35 per cent YTD, followed by Infosys (32 per cent), HCL Technologies (30 per cent), Tata Consultancy Services (30 per cent), and Wipro (over 28 per cent). Persistent Systems fell 26 per cent, Mphasis 24 per cent, Coforge 23 per cent, and Tech Mahindra 15 per cent, according to ACE Equities.

 

“OFSS is structurally different from companies like Infosys or TCS. A large part of its revenue comes from mission-critical banking products used globally by financial institutions, which creates stickier, annuity-like revenue and better pricing power. In an uncertain macro environment, investors prefer such product-led models over traditional manpower-linked outsourcing businesses,” said Sunny Aggarwal, head of fundamental research at SBI Securities.

Will Oracle continue to outperform?

Analysts believe OFSS’s outperformance is underpinned by relatively sustainable revenue growth, sharp margin expansion, operating leverage, and AI-driven productivity gains.

 

“OFSS’s rally appears relatively sustainable as growth is driven by a product-led banking software model rather than discretionary IT services spending. The company delivered strong Q4FY26 results with around 20 per cent revenue growth and sharp margin expansion to 51 per cent, supported by operating leverage and AI-led productivity gains,” said Anshul Jethi, research analyst – IT, LKP Securities.

 

For the quarter ended March 2026, on a consolidated basis and compared with the same quarter of FY25, OFSS reported revenue of ₹2,065 crore, up 20 per cent Y-o-Y. Operating income rose 39 per cent to ₹1,049 crore, while net income increased 31 per cent to ₹842 crore.

 

A key positive, Jethi noted, is the $100-million global banking transformation deal, which enhances medium-term revenue visibility. Its flagship platforms, including FLEXCUBE and OBDX, create high switching costs and sticky recurring revenues, insulating the company from broader IT demand weakness. “Additionally, global banks are entering a multi-year modernisation cycle focused on cloud, APIs, and AI-enabled architectures, where OFSS is well positioned,” he said.

 

However, the sustainability of the rerating, Jethi added, will depend on continued large deal wins, execution, and maintaining elevated profitability levels.

When will IT return to its glory?

Analysts expect the IT sector’s recovery to be gradual and selective, with FY27 seen as a transition year and stronger growth momentum potentially returning from FY28 onwards. Historically, the IT sector has been able to climb the “wall of worry,” but whether this time is different remains to be seen.

 

“We believe regulated industries like BFSI will continue to rely on large IT service providers. The Street will watch for AI partnerships translating into deals and revenue momentum. Coupled with a return of discretionary spending in the US and Europe, IT companies could regain sales growth momentum. FY27 seems to be a transition year, with acceleration possible from FY28. However, only a few players—Tata Technologies, Firstsource, Coforge, and Persistent—are likely to deliver superior growth,” said Aggarwal, adding that uncertainty has driven valuation de-rating.

 

As growth visibility improves over the next four to six quarters, he expects valuation multiples to remain subdued.

 

Jethi, meanwhile, remains cautious and said, “It is difficult to pinpoint a timeline for recovery in Indian IT earnings amid global macro uncertainty and rapid technological/AI disruption. Early signs of recovery would include improved discretionary spending, stronger deal ramp-ups, stabilization in manufacturing demand, and scaling of AI projects from pilot to production. At the same time, major disruption is underway, with players like OpenAI moving closer to enterprise deployment, potentially competing with traditional IT services firms such as Infosys and TCS.”

 

Jethi further believes that recovery is likely to be gradual and selective, favouring companies with stronger AI capabilities, platform/IP assets, and differentiated offerings.  ======================================================== 

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