Top Indian data know-how corporations Tata Consultancy Services and Infosys have the best publicity to regional banks within the United States which might be gripped by a monetary turmoil, analysts at JP Morgan stated on Friday.
Regional banks within the United States account for 2-3 % of their income, JP Morgan stated in a observe, including that the publicity to the just lately collapsed Silicon Valley Bank might be 10-20 foundation factors for TCS, Infosys and smaller rival LTIMindtree, with the Tata group firm within the lead.
All three corporations may want to put aside provisions within the fourth quarter due to their publicity to SVB, JP Morgan stated in a observe.
“The collapse of SVB, Signature Bank and concerns of liquidity across US and the European Union can further soften tech spends by banks over the short term in a year with slowing growth in bank tech budgets,” JP Morgan, which has an “underweight” score on the sector, stated.
India’s IT business is already going through a difficult macroeconomic setting in its key markets of Europe and the United States, the place know-how spending is contracting amid delays in decision-making on long-term offers because the pandemic-led surge in demand pale.
The banking disaster might delay deal ramp-ups, impacting income conversions over the subsequent two quarters, and push again new order closures that would harm income over the subsequent 4 quarters, JP Morgan stated.
Indian IT corporations draw the majority of their income from the banking, monetary companies and insurance coverage (BFSI) sector.
Within BFSI, their publicity to the US banks is on common 62 % and Europe 23 %, JP Morgan stated.
LTIMindtree this week stated it had negligible publicity to US regional banks, together with SVB.
© Thomson Reuters 2023
