4 Undervalued AI Stocks to Watch

#2 Mastek

Next on the list is Mastek.

Mastek Limited is an Indian-headquartered global digital engineering and cloud transformation specialist. Founded in 1982, it has evolved from a traditional IT services company into an agile, "AI-first" digital enterprise partner operating heavily across the UK, US, India, and the Middle East.

The stock of Mastek trades at a PE of 12.29. The company is a part of the BSE IT index, which trades at a PE of 21.2. The stock also trades at a price to book value of 1.8, against the BSE IT Index's median PB of 6.24.

Financial Highlights of Mastek

The company's Q4 results has seen a stable quarter. Despite the various macro and geopolitical headwinds, Mastek was able to deliver a 3.6% quarter-on-quarter revenue growth and continue to maintain a stable EBITDA performance at 16.1%.

The order backlog rupee terms grew by 7.2%, and the consecutive number in dollar terms is 1.6%. The company has renewed a few more contracts which provides long-term visibility.

According to the management, the consistent order book performance as well as the positive demand environment, bodes well for the company in FY27.

#3 Infosys

Next on the list is the stock of Infosys.

Infosys is one of India's largest IT services and consulting companies. Founded in 1981 and headquartered in Bengaluru, it provides services in digital transformation, cloud computing, artificial intelligence (AI), cybersecurity, data analytics, and enterprise software.

The management says they see large opportunities in AI. The company has laid out a strategic AI roadmap with its real-world toolkit of Topaz Fabric, positioning many companies to support the clients' transformation, technology and operations objectives.

Financial Highlights of Infosys

Large deal wins at the company have been good. The same was placed at US$ 14.9 bn for the full year, US$ 3.2 bn for the fourth quarter. The full year was 28% higher than it was in the previous year.

The revenue growth guidance for FY27 has been placed at 1.5% to 3.5% growth year-on-year in constant currency terms.

The company expects acceleration of growth in Financial Services and in Energy, Utility, Resources and Services vertical. The operating margin guidance for FY27 is 20% to 22%, which is almost the same as last year.

#4 AvenuesAI

AvenuesAI (formerly known as Infibeam Avenues) is an AI-led fintech and digital payments company. Its AI strategy is centered around integrating AI into payment processing, fraud detection, merchant solutions, and enterprise software.

The company is a part of the Nifty Microcap 250. The median PE of the stocks from the index is 26.7, while the stock of AvenuesAI trades at a PE of 16.1. Similarly, the index constituents have a median PB of 3.39, while the company's PB is slightly over 1.

The company's payment infrastructure suite includes acquiring and issuing solutions, as well as core payment infrastructure for banks.

Its flagship brand, CCAvenue, powers one of India's largest Payment Gateway (PG) platforms, offering over 200 payment options that enable merchants to accept payments through websites and mobile devices in 27 international currencies.

AvenuesAI Financial Snapshot (FY23-25)

On the financial front, AvenuesAI reported a good set of Q4FY26 numbers. Net sales of the company more than doubled to Rs 24,895 m vs Rs 11,605 m YoY. The net profits of AvenuesAI surged to Rs 903 from Rs 573 m YoY.

The company can tap into India's fast growing digital payments market, the increasing adoption of digital solutions by merchants, continued international market expansion, and widespread adoption of AI-powered payment and fraud management technologies.

However, it faces significant challenges including intense competition in the fintech sector, potential changes in regulations and the successful execution of its expansion strategies.

Happy investing.

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