<p>Rupee depreciation in the last couple of months is providing a direct tailwind to IT services firms’ profit margins. Analysts said IT services firms witnessed stable profit margins, and that for many firms will remain so in FY27, considering the present depreciation.</p>.<p> The rupee has been depreciating for a couple of months now, and on Wednesday, it touched an all-time low of 96.90 against the US dollar.</p>.<p>JM Financial in its recent report mentioned that given the ongoing competitive intensity and increasing client expectations around AI-led productivity benefits, it had expected margin pressure to continue. “However, the recent depreciation in the INR (5.7% in last three months) is likely to provide a near-term cushion to margins in our view,” it said.</p>.<p>Since IT firms earn in foreign currencies and spend a large part in India, when the rupee weakens, the dollar revenue becomes valuable.</p>.<p>Also, IT stocks are seeing sharp recovery. Recently, during Infosys’ Q4 earnings, CFO Jayesh Sanghrajka said rupee benefit most of the times gets off-set by cross-currency headwinds. </p>.Rupee falls 8 paise to 90.69 against US dollar in early trade.<p>“Because when the US dollar appreciates, it appreciates against most currencies and that kind of off-sets each other. If you look at this quarter, specifically for us, there was close to 50 basis points of headwind that we got because of amortisation of one of the acquisition-related intangibles. Last quarter, we had a 30 basis points gain, so in a way these two went into two different directions for us in terms of margin impact, both became a headwind. And then 20 basis points on account of employee-related costs. So, all of those were headwinds that were off-set by 40 basis points from currency and 30 basis points from Maximus,” he said.</p>.<p>The company’s operating margin for Q4 declined by 0.3% to 20.9%, sequentially.</p>
<p>Rupee depreciation in the last couple of months is providing a direct tailwind to IT services firms’ profit margins. Analysts said IT services firms witnessed stable profit margins, and that for many firms will remain so in FY27, considering the present depreciation.</p>.<p> The rupee has been depreciating for a couple of months now, and on Wednesday, it touched an all-time low of 96.90 against the US dollar.</p>.<p>JM Financial in its recent report mentioned that given the ongoing competitive intensity and increasing client expectations around AI-led productivity benefits, it had expected margin pressure to continue. “However, the recent depreciation in the INR (5.7% in last three months) is likely to provide a near-term cushion to margins in our view,” it said.</p>.<p>Since IT firms earn in foreign currencies and spend a large part in India, when the rupee weakens, the dollar revenue becomes valuable.</p>.<p>Also, IT stocks are seeing sharp recovery. Recently, during Infosys’ Q4 earnings, CFO Jayesh Sanghrajka said rupee benefit most of the times gets off-set by cross-currency headwinds. </p>.Rupee falls 8 paise to 90.69 against US dollar in early trade.<p>“Because when the US dollar appreciates, it appreciates against most currencies and that kind of off-sets each other. If you look at this quarter, specifically for us, there was close to 50 basis points of headwind that we got because of amortisation of one of the acquisition-related intangibles. Last quarter, we had a 30 basis points gain, so in a way these two went into two different directions for us in terms of margin impact, both became a headwind. And then 20 basis points on account of employee-related costs. So, all of those were headwinds that were off-set by 40 basis points from currency and 30 basis points from Maximus,” he said.</p>.<p>The company’s operating margin for Q4 declined by 0.3% to 20.9%, sequentially.</p>