An Analysis of Key Drivers Shaping Valuation and Financial Performance in the Indian IT Sector

The Indian Information Technology (IT) sector has emerged
as a critical driver of economic growth, export earnings, and
technological innovation, attracting significant interest from
investors and policymakers. This study analyzes the key drivers
shaping firm valuation and financial performance in the Indian
IT sector. Using secondary data from leading listed IT companies
over a selected study period, the research examines the influence
of financial, operational, and market-based factors on valuation
indicators and performance measures. Key variables considered
include revenue growth, profitability ratios, cost efficiency, research
and development intensity, leverage, firm size, and market sentiment
indicators. Financial performance is assessed through metrics
such as return on assets, return on equity, and operating margins,
while valuation is evaluated using measures like price–earnings
ratio and market-to-book value. Employing descriptive statistics,
correlation analysis, and multiple regression models, the study
identifies the most significant determinants impacting valuation
and performance. The findings reveal that consistent revenue
growth, strong operating margins, and efficient asset utilization
play a decisive role in enhancing both valuation and financial
outcomes. Additionally, innovation investment and global demand
conditions positively influence market perception of IT firms. The
study offers valuable insights for investors, corporate managers, and
policymakers by highlighting strategic and financial levers that can
improve firm value and competitiveness in the Indian IT sector.