In India, the AI industry is rapidly evolving, with several companies leveraging the technology for various applications, from healthcare and finance to retail and manufacturing.
Nvidia, a leading AI chipmaker, has reported over 100% revenue growth for the June quarter, reaching a record $30 billion, with a 175% year-over-year increase in operating income. This highlights the global surge in AI adoption, including in India.
India has a long history with AI, and its market has grown exponentially in recent years. AI systems have become more important because they can create economic value and solve social problems.
With its vast talent pool, growing digital infrastructure, and government initiatives like Digital India, India presents significant opportunities for companies looking to leverage AI technologies.
AI is useful in many sectors, like education, agriculture, and healthcare. It can help with things like precision farming advice or remote medical diagnosis.
It also makes it easier for people to access government services. According to a report by BCG and Nasscom, the AI market in India is growing quickly, and is projected to reach around US$17 billion (bn) by 2027.
In this article, we will look at the top companies that are present in the AI sector in India.
#1 Affle India
Incorporated in 1994, Affle is a global technology company with a proprietary consumer intelligence platform that transforms ads into recommendations.
This helps marketers effectively identify, engage, acquire, and drive transactions with their potential and existing users.
The company offers 2 broad categories of services i.e., the consumer platform services and enterprise platform services.
In the consumer platform services, Affle helps its clients with new consumer conversions through targeted mobile advertising and earns revenues on a cost-per-consumer basis.
In the enterprise platforms business, the company provides end-to-end solutions for enterprises to enhance their engagement with mobile users such as developing Apps, enabling offline to online commerce for offline businesses with e-commerce aspirations, etc.
Affle has international presence across the globe including India, Southeast Asia, Middle East, Africa, North America, Europe, Japan, South Korea and Australia. The company derives 65% of its sales from exports and balance 35% from the domestic market.
Coming to the financials, Affle reported a 27.8% revenue growth in Q1FY25 with operating profit growth of more than 33.8%. Ebitda margins expanded significantly from 21.6% in Q1FY24 to 24.9% in Q1FY25.
Going forward, management is optimistic about further accelerating the growth trajectory with gradual increases in operating profit margins.
This follows a noted shift in advertising from traditional to digital platforms, with increasing importance placed on performance-based metrics.
The stock is up 52% in the last one year due to strong operational performance.
#2 Oracle Financial Services Software
Oracle Financial Services Software Ltd provides financial software, custom application development, consulting, IT infrastructure management, and outsourced business processing services to the financial services industry.
The company owns and operates brands such as Oracle, Java, and MySQL as its registered trademarks. Flexcube is also one of company’s offerings which is a platform for retail, corporate, and investment banking. It caters to areas such as risk management, treasury, consulting, etc.
Oracle has a diversified revenue base with not much concentration in a single geography. It derives 23% of its revenues each from USA and Asia Pacific, 20% from Middle East and Africa, 17% from Europe, 10% from India, and the balance 7% from rest of America.
However, the company derives roughly 51% of its revenues from only one client which indicates that any alterations in the order flow from this client can lead to a substantial impact on Oracle’s financial performance.
The company’s parent Oracle Corporation recently announced a robust forecast for 2025, expecting revenue growth in double digits, surpassing analysts’ expectations.
Additionally, Oracle Corp. revealed a strategic partnership with OpenAI, the creator of ChatGPT. This collaboration aims to expand the company’s cloud infrastructure offerings, enhancing its service capabilities for customers.
Coming to the financials, the company reported a robust revenue growth of 19.1% in Q1FY25 and Ebitda growth of 33.8%. Ebitda margins also improved to 51.4% in Q1FY25 from 49.6% in Q1FY24.
Oracle Financial Services Software stock is up 175% in the last one year on the back of strong financial performance.
#3 Persistent Systems
Persistent Systems provides software engineering and strategy services to help companies implement and modernise their businesses.
The company has its own software and frameworks with pre-built integration and acceleration. The company has partnerships with service providers such as Salesforce and Amazon web services.
Persistent was named fastes growing Indian IT services brand since 2020, with 268% growth and ranked 9th among Indian IT Services companies.
Persistent has a global presence in more than 21 countries across the world including India, Australia, Canada, Germany, and Japan among the prominent ones.
Geographically, the company derives 80% sales from North America market, 9% revenues from Europe, 10% from India, and balance 1% from rest of the world.
Persistent Systems boasts a diversified clientele consisting of 375+ clients and services 6 out of the top 10 global technology companies, 5 out of the top 10 largest banks in the US and India, and 7 of the top 10 healthcare providers worldwide.
The company recently announced an intent to acquire 100% stake in US-based software firm Starfish Associates for a consideration of $20.7 million. Known for its cutting-edge enterprise communications automation platform, Starfish caters to the world’s largest enterprises, including many Fortune 500 companies.
Coming to the financials, Persistent reported a growth of 17.9% in its consolidated revenues and EBITDA grew by 21.6% for Q1FY25. EBITDA margins improved slightly to come in at 17.8% versus 17.1% in the previous year.
Shares of Persistent Systems are up 98% in the last one year. The stock is up by 4.6% in the past one month.
#4 Zensar Technologies
Zensar Technologiesis a leading digital solutions and technology services company. It is part of the Mumbai-based RPG group and is headquartered in Pune, India.
The company operates in two segments: Application Management Service and Infrastructure management service. It is focussed on industry verticals, such as hi-tech and manufacturing, consumer services, and banking, financial services, and insurance.
The company derives 82% of its revenues from the digital and application services business and the balance 18% from digital foundation services.
Geographically, the company earns 67% of its revenues from the US, 21% from Europe, and 12% from Africa. Highest contribution to revenue comes from the BFSI sector which contributes 38%, followed by hi-tech and manufacturing contributing 27% and 25% respectively.
The company has 148+ active clients out of which the top 5 clients contribute to 31% of revenues.
Zensar announced the acquisition of pharma and life sciences consulting firm BridgeView Lifesciences for a total deal value of $25 m. This will allow the firm to expand its healthcare offerings.
Coming to the financials, Zensar Tech reported 5% growth in consolidated revenues and Ebitda declined 14.7% in Q1FY25. Ebitda margins came in at 18.5% compared to the previous year at 21.1%.
Conclusion
The landscape of AI is brimming with potential, driven by rapid advancements in technology and increasing adoption across various industries.
As artificial intelligence continues to revolutionise sectors such as healthcare, finance, and autonomous systems, investors have the opportunity to tap into the transformative power of these innovations.
By keeping up with developments and focusing on leading AI companies, investors can position themselves to benefit from future advancements.
AI is the next big thing in the digital ecosystem. Investors can benefit from choosing the right companies and staying put over the longer term for wealth creation to play out.
However, when considering whether to invest in AI stocks, it is important to be aware of the risks involved. Regulatory changes, competition, and technological limitations are all factors that pose challenges to the AI industry.
Remember the challenges before diving headfirst, as the industry’s high competitiveness can lead to established companies with significant resources to quickly disrupt existing players, leading to potential losses for investors.
Happy Investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com