Top Indian information technology firms Tata Consultancy Services and Infosys have the highest exposure to regional banks in the US that are gripped by a financial turmoil, analysts at JP Morgan said.
Updated: March 17, 2023
Top Indian information technology firms Tata Consultancy Services and Infosys have the highest exposure to regional banks in the United States that are gripped by a financial turmoil, analysts at J.P.Morgan said on Friday.
Regional banks in the United States account for 2-3% of their revenue, J.P. Morgan said in a note, adding that the exposure to the recently collapsed Silicon Valley Bank could be 10-20 basis points for TCS, Infosys and smaller rival LTIMindtree, with the Tata group company in the lead.
All three companies might need to set aside provisions in the fourth quarter due to their exposure to SVB, J.P. Morgan said in a note.
“The collapse of SVB, Signature Bank and concerns of liquidity across U.S. 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,” J.P. Morgan, which has an “underweight” rating on the sector, 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 decision-making on long-term deals as the pandemic-led surge in demand faded.
The banking crisis could delay deal ramp-ups, impacting revenue conversions over the next two quarters, and push back new order closures that could hurt revenue over the next four quarters, J.P. Morgan said.
Indian IT firms draw the bulk of their revenue from the banking, financial services and insurance (BFSI) sector.
Within BFSI, their exposure to the U.S. banks is on average 62% and Europe 23%, J.P. Morgan said.
Delhi Capitals partners with Satya Nadella to buy stake in Seattle franchise
The Capitals already owns teams in men’s T20 leagues in South Africa and the United Arab Emirates as well as in the Women’s Premier League in India
Delhi capitals have bought a stake in the Seattle franchise of a new Twenty20 tournament in the United States as Indian Premier League (IPL) teams continue to expand their global footprint.
Delhi Capitals co-owner GMR Group has partnered with a group of investors that includes Microsoft Corp’s India-born CEO Satya Nadella to run Seattle Orcas in Major League Cricket (MLC), which begins in July.
The Capitals already owns teams in men’s T20 leagues in South Africa and the United Arab Emirates as well as in the Women’s Premier League in India.
“We see America as the new frontier for cricket’s growth globally, and the Pacific Northwest provides an incredible opportunity for us to bring the resources of GMR Sports to the region …” Kiran Kumar Grandhi, Managing Director and CEO of GMR Group, said in a statement on Thursday (16).
Delhi’s IPL rivals Kolkata Knight Riders, one of the early investors in MLC, own the Los Angeles franchise and are also building a 10,000-capacity stadium in southern California.
Mumbai Indians have bought the MLC’s New York franchise while Chennai Super Kings have teamed up with a local investor to acquire the Texas franchise, ESPNcricinfo website reported.
The inaugural edition of the six-team MLC tournament will be played between July 13-30 in Dallas.
(Reuters)
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