Exporters May Lose Rupee Depreciation, High-Price Tailwinds In H2FY27: Nuvama

New Delhi, Aug 20 (KNN) Indian exporters could see some of the benefits from rupee depreciation and elevated prices weaken in the second half of FY27, after these factors supported strong revenue growth in the first quarter, Nuvama Institutional Equities said in a report.

In its Q1FY27 Earnings Review, the brokerage highlighted that export-oriented companies recorded a sharp increase in revenue growth during April-June, with top-line growth rising to 15 per cent year-on-year from 6 per cent in FY26.

“INR depreciation along with high prices owing to supply shock have supported the top line. Some of these tailwinds will start to fade in H2FY27,” ANI reported, citing the report.

IT Sector Benefits From Weaker Rupee

The currency movement was particularly supportive for the information technology sector. Nuvama said IT companies reported weaker top-line growth in US dollar terms, but the depreciation of the rupee cushioned the impact and helped earnings growth accelerate to the mid-teens.

The brokerage noted that healthy deal bookings and stable FY27 guidance pointed to a broadly stable demand environment, although decision-making cycles remained prolonged.

At the same time, Nuvama flagged currency movements as a key risk for companies with substantial overseas revenues. A sharp appreciation of the rupee against the US dollar and other major currencies could weigh on their financial performance.

Uneven Trends Across Export Sectors

Performance varied across export-oriented industries during the quarter. Chemical companies reported strong results, while pharmaceutical companies recorded relatively weaker earnings.

Nuvama said a weaker rupee and the stabilisation of supply disruptions could continue to provide some support to exporters in the near term. However, the brokerage expects the benefit from these factors to moderate as the year progresses.

It also identified the fading impact of other factors that have supported corporate revenue growth, including rupee depreciation, GST cuts, a favourable base effect and higher metal prices.

The brokerage expects these tailwinds to weaken from H2FY27, potentially bringing greater focus on underlying demand conditions, input costs and currency movements for export-oriented companies.

(KNN Bureau)