New Delhi, May 13 -- Tier-2 IT companies of India continued to outperform larger peers and issued stronger FY27 guidance, even as major Indian IT firms remained cautious due to global macroeconomic challenges, according to a report by Nuvama.

"While Tier-1 companies continue to be impacted by cannibalisation of legacy revenue streams by Gen AI and weak global macro, Tier-2 companies have been able to find pockets of growth and mitigate the impacts to a large extent. We expect this trend to continue and the markets to accordingly reward Tier-2 players with higher valuations than Tier-1," the report stated.

The report said the mid-cap IT segment maintained its momentum in Q4FY26.

"FY27 guidance for most Tier-1 companies was modest, while...