United States based investment bank and financial service provider JPMorgan Chase Co. (JPM) is wet to cut down on its information technology (IT) operations in India since the growth boom the sector experienced during the pandemic time is over.
The company’s analysts say that they have downgraded the sector to underweight. The sector is valued at $194 billion and its software services helped to facilitate remote working and online shopping at the height of coronavirus when lockdowns and movement restrictions were the order of the day.
“We see peak revenue growth behind us and EBIT margins trending down from inflation, mean reversion. While the bottom-up outlook remains positive from most Services, Software and SaaS names YTD, and the tech spending cycle remains buoyant structurally, we feel there are more downside risks to current earnings assumptions,” said JPM.
The bank expects the slowdown to further worsen next year partly due to a potential decrease in orders from United States which is its major markets and where economic growth has started to weaken.
