Top Indian information technology firms Tata Consultancy Services and Infosys have the most exposure among regional banks in the United States, which are grappling with financial turmoil, JP Morgan analysts said on Friday.
in regional banks United States of america 2-3% of their revenue, JP Morgan said in a note, adding that the risk could be 10-20 basis points for the recently collapsed Silicon Valley bank TCSLed by Infosys and smaller rival LTIMindtree, a Tata group company.
JPMorgan said in a note that all three companies may need to set aside provisions in the fourth quarter because of their exposure to SVBs.
JP Morgan, which is “underweight”, said “the collapse of SVB, Signature Bank and liquidity concerns across the US and EU could reduce tech spending by banks in the short term to a year.” Rating on the field, said.
India’s IT industry is already facing a challenging macroeconomic environment in its key markets of Europe and the United States, where technology spending is contracting amid delays in deciding long-term deals because of the pandemic. There has been a decrease in demand.
JPMorgan said the banking crisis could delay deal ramp-up, impact revenue conversion over the next two quarters and shut down new orders that could hurt revenue.
Indian IT firm Most of their revenue is derived from the banking, financial services and insurance (BFSI) sector.
JP Morgan said that within BFSI, their exposure to US banks is on an average 62% and Europe is 23%.
LTIMindtree said this week that it has negligible exposure to US regional banks, including SVB.
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