Rupee, price tailwinds for Indian exporters may fade in H2FY27: Nuvama

New Delhi [India]: Indian exporters could see some of the revenue tailwinds from rupee depreciation and elevated prices fade in the second half of FY27, after these factors helped accelerate export-sector growth in the first quarter, according to a Nuvama Institutional Equities report.

The report said exporters posted strong revenue growth during the April-June quarter, supported by the depreciation of the Indian rupee and higher prices amid supply disruptions.

"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," Nuvama said in its Q1FY27 Earnings Review.


Export-oriented sectors recorded a sharp acceleration in revenue growth during the quarter. According to the report, top-line growth for exporters rose to 15 per cent year-on-year in Q1FY27 from 6 per cent in FY26. Nuvama attributed the acceleration mainly to prices and depreciation of the rupee.

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

"IT companies' top line disappointed in USD terms, but weak INR cushioned the impact resulting in earnings accelerating to mid teens," the report said.

The report also pointed to different trends within export-oriented sectors. Chemical companies reported a strong quarter, while pharmaceutical companies recorded relatively weak earnings. Nuvama said a weaker rupee and stabilisation of supply disruptions could continue to provide some support to exporters.

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However, currency movements remain an important risk for sectors with significant overseas revenues. In its assessment of the IT sector, the report said healthy deal bookings and stable FY27 guidance indicated stability in the demand environment, although decision-making cycles remained extended.

It added that "a key risk is any adverse currency movement" and said a sharp appreciation of the rupee against the US dollar and other currencies could negatively affect financial performance in the sector.

The moderation in currency and price benefits is part of a broader risk Nuvama sees emerging in the second half of the financial year. The brokerage said factors including rupee depreciation, GST cuts, a low base and higher metal prices, which supported corporate revenue growth over recent quarters, are expected to begin fading from H2FY27.