TCS, Infosys Have Highest Exposure to US Regional Banks, Says JP Morgan After SVB Collapse

Exposure to the collapsed Silicon Valley Bank could be 10-20 basis points for TCS, Infosys, and LTIMindtree, according to JP Morgan.

By Reuters | Updated: 17 March 2023 15:07 IST

Highlights

Regional US banks account for 2-3 percent of IT firms’ revenue
Indian IT firms draw the bulk of their revenue from BFSI sector
LTIMindtree said it had negligible exposure to US regional banks

India's IT industry is facing a challenging macroeconomic environment

Photo Credit: Reuters

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 JP Morgan said on Friday.

Regional banks in the United States account for 2-3 percent of their revenue, JP 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, JP Morgan said in a note.

Indian Startups Have Deposits Worth $1 Billion in SVB, Says IT Minister

"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" 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, JP Morgan said.

Silicon Valley Bank Resolution Will Bring Relief to Startups: IT Minister

Indian IT firms draw the bulk of their revenue from the banking, financial services and insurance (BFSI) sector.

Within BFSI, their exposure to the US banks is on average 62 percent and Europe 23 percent, JP Morgan said.

LTIMindtree this week said it had negligible exposure to US regional banks, including SVB.

The OnePlus 11 5G was launched at the company's Cloud 11 launch event which also saw the debut of several other devices. We discuss this new handset and all of OnePlus' new hardware on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.