Shares of Coforge are trading near the day's high after the company clarified that its exposure to US regional banks is limited. The stock was among the top midcap losers on Tuesday after reports indicated that it has exposure to some US regional banks.

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The correction in stock price came as a result of the Silicon Valley Bank collapse spillover.

In an exchange filing, the company now says that the SVB accident will not impact the overall performance.

"We wish to call out that our exposure to revenues from the US regional banking clients is very limited. We do not see current market events in any manner impacting our performance. We remain consistent with commentary provided during the last investor call around our performance outlook and continue to target robust growth," the statement said.

Earlier, brokerage firm UBS mentioned in a note that the SVB collapse and subsequent fall seen in global banks may led to some major banking clients rejigging their IT expenses. The BFSI segment which contributes nearly 30-35 percent of the total revenue of Indian IT services, is expected to face the cost-cutting brunt.

The spill-over impact of SVB is not yet felt in larger US banks which form bulk of the revenue for the Indian IT heavyweights like TCS, Infosys, HCL Tech and others. However, Midcap IT names are exposed to some regional names like Fifth Third and First Republic Bank. Stocks like Mphasis and Coforge have exposure to such banks.

Analysts say that the SVB episode will be a reason for concern even if does not cause any systemic risk. "The recent developments may lead to banking clients procrastinating on IT spending decisions, given the capital constraints. The budget cycle of calendar year 2023 may also be delayed. This would result in longer sale cycles which would in all probability, impact the sector’s near-term visibility," the note said.

Shares of Coforge are trading 0.6 percent higher at Rs 3,946, having recovered as much as 3 percent from the day's low.

(Edited by : Hormaz Fatakia)

First Published:Mar 15, 2023 3:10 PM IST