AI impact on IT sector still unfolding, says DSP Mutual Fund's Vinit Sambre

The debate around the impact of artificial intelligence (AI) on the IT sector is expected to continue for some time, says Vinit Sambre, Head of Equities at DSP Mutual Fund, which manages assets worth $23.99 billion as of September 30, 2025.

“I think it is a big debate as of now,” Sambre said. “We are all seeing what is happening at the macro level in IT, and the noise levels are going to remain very high.”

Drawing parallels with earlier technological shifts like digitisation and cloud adoption, he noted that Indian IT firms had adapted successfully before and are likely to do so again. He highlighted that mid-cap IT companies have become more agile, citing Coforge as an example of a firm outpacing peers due to strong execution.

On the auto sector, Sambre said DSP Mutual Fund holds significant exposure to auto ancillary stocks under its discretionary consumption theme. He explained that these companies have diversified their client base and moved toward more engineering-focused operations. “These companies have created a global benchmark in terms of being cost-effective,” he added, noting that tariff-related challenges may be short-term and that goods and services tax (GST) benefits could support the sector.

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Regarding financials, he said both banking and non-banking financial companies (NBFCs) sectors are showing signs of recovery. “I see this quarter as the peak in terms of earnings pressure,” he said, adding that growth momentum is likely to improve, with NBFCs expected to outperform due to their niche positioning.

Sambre also sees potential in insurance companies, which have rebounded from regulatory challenges. “Most of the regulatory noise is behind them, and the sector could see better growth,” he said, noting that margins have improved over the past year.

He emphasised that the trend of financialisation in India remains strong despite cyclical phases. “If we take a five-year view, the trend is only going to remain positive for the capital markets,” Sambre said. DSP continues to focus on wealth management, digital broking platforms, and exchanges, using a selective approach based on company execution.

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On AI, he noted that Indian IT firms are unlikely to benefit immediately, as they are not part of the initial hardware and implementation wave. “But once the service component grows, that is when Indian companies should gain,” he added.

Reflecting on missed opportunities in some high-growth tech names, he admitted, “We were not able to clearly understand their path to profitability in some cases, and hence we left those opportunities.” However, he said DSP remains open to reconsidering them once fundamentals improve.

For the full interview, watch the accompanying video

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