March 17 (Reuters) – High Indian info know-how corporations Tata Consultancy Providers (TCS.NS) and Infosys (INFY.NS) have the best publicity to regional banks in the US which might be gripped by a monetary turmoil, analysts at J.P.Morgan mentioned on Friday.
Regional banks in the US account for 2-3% of their income, J.P. Morgan mentioned in a word, including that the publicity to the lately collapsed Silicon Valley Financial institution may very well be 10-20 foundation factors for TCS, Infosys and smaller rival LTIMindtree (LTIM.NS), with the Tata group firm within the lead.
All three firms would possibly have to put aside provisions within the fourth quarter on account of their publicity to SVB, J.P. Morgan mentioned in a word.
“The collapse of SVB, Signature Financial institution and considerations of liquidity throughout U.S. and the European Union can additional soften tech spends by banks over the quick time period in a 12 months with slowing development in financial institution tech budgets,” J.P. Morgan, which has an “underweight” score on the sector, mentioned.
India’s IT business is already going through a difficult macroeconomic setting in its key markets of Europe and the US, the place know-how spending is contracting amid delays in decision-making on long-term offers because the pandemic-led surge in demand light.
The banking disaster might delay deal ramp-ups, impacting income conversions over the subsequent two quarters, and push again new order closures that might harm income over the subsequent 4 quarters, J.P. Morgan mentioned.
Indian IT corporations draw the majority of their income from the banking, monetary providers and insurance coverage (BFSI) sector.
Inside BFSI, their publicity to the U.S. banks is on common 62% and Europe 23%, J.P. Morgan mentioned.
LTIMindtree this week mentioned it had negligible publicity to U.S. regional banks, together with SVB.
Reporting by Aniruddha Ghosh and Nallur Sethuraman in Bengaluru; Modifying by Dhanya Ann Thoppil
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