Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Industry / Infotech/  IT services exporters whipped by currency headwinds
BackBack

IT services exporters whipped by currency headwinds

The greenback rose 9% against currencies including the euro in January-to-March from a quarter earlier

The rupee found support in a market view that the US will tighten monetary policy at a slower pace than thought, lowering the chances of capital outflows from emerging markets including India. Photo: MintPremium
The rupee found support in a market view that the US will tighten monetary policy at a slower pace than thought, lowering the chances of capital outflows from emerging markets including India. Photo: Mint

Bengaluru: The dollar’s biggest quarterly rise against other major currencies since 2008 has undermined sales of India’s IT services firms in non-US markets, including Europe, in what was already a seasonally slow period.

The greenback rose 9% against currencies including the euro in January-to-March from a quarter earlier, driven by the diverging outlook for US monetary policy and economies such as Europe—the second-biggest market of Indian IT services exporters.

The euro’s decline coincided with the rupee’s strength—bad news for Indian exporters to the euro zone. The euro fell 12.4% against the rupee in its biggest quarterly drop ever.

The rupee found support in a market view that the US will tighten monetary policy at a slower pace than thought, lowering the chances of capital outflows from emerging markets including India.

The resulting cross-currency headwinds crimped quarter-on-quarter revenue growth of India’s $146 billion IT industry by 2.25 to 3.00 percentage points in the final three months of the fiscal year ended on 31 March, according to a report by brokerage and investment group CLSA this week.

The non-US businesses of Indian IT companies have grown significantly in recent years as they sought to diversify their revenue streams after the 2008 crisis saw a plunge in US business.

The firms have enlarged their footprint in Europe through acquisitions and local offices. Revenues from Europe have nearly doubled in the last five years for India’s top six IT companies by market value, including Infosys Ltd, Wipro Ltd and HCL Technologies Ltd, outpacing revenue growth from the US in that period.

The six companies may report revenue growth of 13.2% in the fiscal year ended on 31 March, according to estimates compiled by Thomson Reuters, the slowest in five years.

“In the March quarter, revenue growth will be down by 2 to 2.5% quarter-on-quarter, but the currency impact should be less in the coming quarters due to reduced volatilities in the cross currencies," said Sarabjit Kour Nangra, vice-president of research at Mumbai-based Angel Broking Ltd.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 08 Apr 2015, 06:06 PM IST
Next Story footLogo
Recommended For You
Infotech Stocks
₹1,547.25-0.26%
₹1,484.10.99%
₹4,928.750.15%
₹3,837.51.2%
₹472.21.66%
Switch to the Mint app for fast and personalized news - Get App