Indian Exporters: Rupee & Price Gains to Fade by H2FY27

Indian exporters will experience a significant reduction in revenue tailwinds from rupee depreciation and elevated prices by the second half of fiscal year 2027, according to a report by Nuvama Institutional Equities.

These favorable conditions had substantially boosted export-sector growth during the first quarter of fiscal year 2027, with the information technology sector notably benefiting from a weaker rupee.

Q1FY27 Sector Performance Highlights

• Information technology sector earnings accelerated to mid-teens in rupee terms, despite weaker performance in US dollar terms.
• The chemicals sector reported a series of strong quarters.
• Pharmaceuticals, conversely, demonstrated weaker earnings during the period.

Nuvama emphasizes that currency movements present a substantial risk for companies with considerable overseas revenues. A significant appreciation of the rupee against other major currencies could adversely affect their financial outcomes.

Broader Risk Factors Identified

• The impact of rupee depreciation is expected to fade from H2FY27.
• Benefits from GST cuts are also projected to diminish.
• A low base effect, which previously supported growth, will no longer be a factor.
• Higher metal prices, another previous tailwind, are anticipated to subside.

These broader factors are collectively expected to impact overall corporate revenue growth in the coming periods, signaling a shift in market dynamics for Indian businesses with international exposure.