Foreign institutional investors increased holdings in three prominent Indian AI-focused companies during the March 2026 quarter, signaling renewed confidence in the sector's growth trajectory. These moves follow a period of caution, as AI adoption accelerates across healthcare, finance, retail, manufacturing, cybersecurity, and automobiles. Investors eye long-term productivity gains and profitability improvements from digitalisation trends favouring AI software, cloud computing, semiconductors, automation, and data analytics.
Tech Mahindra Sees Selective FII Return
Tech Mahindra, a key player in IT services under the Mahindra Group, operates in over 90 countries, serving banking, healthcare, manufacturing, and communications with expertise in AI, cloud computing, cybersecurity, telecom, and digital transformation. FII stake dipped from 20.60% in September 2025 to 17.94% in December 2025, then rose to 18.59% by March 2026, per Equitymaster data. This uptick reflects FIIs' selective re-entry amid the company's AI push.
The firm embeds AI across its services, hiring specialists to drive innovation. Management noted rising engagements with large clients on data and AI initiatives, paving the way for enterprise-wide transformations. In FY26, US$50 million-plus clients grew 4 year-on-year to 29, while US$20 million-plus clients rose 7 to 66, underscoring deepened relationships in AI, data, and consulting.
Revenues reached US$6,385 million, up 1.9% year-on-year and 0.6% on a constant currency basis. Operating profit climbed 31.4% to US$797 million, with margins expanding 290 basis points to 12.6% from 9.7%.
Tata Elxsi Advances GenAI Capabilities
Tata Elxsi delivers design and technology services in automotive, broadcast, communications, healthcare, and transportation, leveraging IoT, cloud, mobility, virtual reality, and AI to reimagine products. FII holdings dropped from 12.53% in September 2025 to 8.57% in December, rebounding to 11.08% in March 2026, indicating restored faith after valuation pressures.
In FY26, the company advanced GenAI adoption through partnerships, its DevStudio.ai automotive platform, tool stacks, infrastructure investments, and upskilling. These steps position Tata Elxsi as an AI-native engineering firm, emphasising design-led, AI-enabled offerings for growth and margins.
LTM Builds AI Ecosystem Momentum
LTM, rebranded from LTIMindtree post-merger and backed by Larsen & Toubro, specialises in cloud, AI, cybersecurity, digital engineering, analytics, and enterprise applications. FII ownership edged up steadily from 6.40% in September 2025 to 6.51% in December and 6.63% in March 2026, showing gradual trust-building.
The launch of BlueVerse, an agentic AI ecosystem, speeds clients' concept-to-value processes. Q4 FY26 order inflows hit US$1.7 billion, the sixth straight quarter above US$1.5 billion. Key wins include AI-led transformations for a US financial institution and an enterprise software provider.
India's AI stocks draw FII interest via government digital initiatives, enterprise automation, and smart solution demand. These firms stand to gain as AI reshapes industries, though investors weigh execution risks against expansion potential.
