Why IT Stocks Are Rising. 3 Undervalued Smallcap IT Stocks to Watch

#2 Saksoft

Next on our list is the stock of Saksoft.

Saksoft is a Chennai-based IT services company specializing in digital transformation, data analytics, cloud, automation, enterprise applications, and AI-driven solutions.

The stock of Saksoft trades at a p/e of 15.1, against the BSE IT index, which trades at a PE of 20.6. The PB value of 2.4 is also below the index's median PB of 5.98.

Financial Highlights of Saksoft

On the financial front, the company reported Q4 FY26 revenues of Rs 2,488 m vs Rs 2,399 m YoY. The company reported a net profit of Rs 359 m vs Rs 300 m YoY.

Saksoft added a new customer in US$ 0.5 m bracket in the logistics vertical and moved one customer from US$ 0.5 m to US$ 1 m commerce vertical as compared to the previous financial year.

According to the management, they continue to invest in AI capabilities and accelerators to strengthen its "innovate, modernise and operate" proposition.

#3 R Systems International

Next on the list is the stock of R Systems International.

R Systems International is a mid-sized Indian IT services and digital engineering company focused on digital transformation, cloud, AI, data analytics, product engineering, and enterprise software.

The stock of R Systems trades at a PE of 15.3, against the BSE IT index, which trades at a PE of 20.6. The PB value of 3.7 is also below the index's median PB of 5.98.

Financial Highlights of R Systems International

On the financial front, the company reported revenues of Rs 5,748 m for the quarter ending 31 March 2026 vs Rs 4,425 m YoY. R Systems reported a net profit of Rs 654 m vs Rs 386 m YoY.

The company had US$ 76.5 m of ACV on a TTM basis last quarter. In the quarter ending 31 March, the company has reported US$ 82.5 m of ACV wins.

This shows a positive momentum and gives revenue visibility to the company going forward.

Conclusion

Smallcap undervalued IT stocks can offer significant upside potential as digital transformation, cloud computing, AI, and technology spending continue to expand globally.

These companies often trade at attractive valuations despite possessing niche capabilities, strong client relationships, or improving financial performance.

However, small-cap IT stocks also carry higher risks, including client concentration, intense competition, limited pricing power, and earnings volatility.

Investors should focus on companies with strong balance sheets, healthy order books, consistent profit growth, and capable management teams.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

Happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...