Staff Report:

Pakistan recorded IT exports of $298 million in August 2024, showing a 27% year-on-year increase and a 4% month-on-month growth. These exports exceed the 12-month average of $275 million.

The rise is driven by the expansion of IT companies’ global client bases, especially in the GCC region, the State Bank of Pakistan’s increase in retention limits for Exporters’ Specialized Foreign Currency Accounts, and stability in the Pakistani rupee, encouraging exporters to repatriate more profits.

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The month-on-month increase is partly due to more working days in August compared to July. Daily export proceeds stood at $14.2 million in August, slightly lower than July’s $14.3 million per day.

Pakistani IT companies have been actively engaging with global clients, attending major events such as London Tech Week, Collision Canada, and Black Hat in the USA. A survey by the Pakistan Software Houses Association (P@SHA) shows that most IT companies maintain specialized foreign currency accounts.

A significant development in July 2024 was the State Bank of Pakistan introducing a new category, Equity Investment Abroad, allowing IT exporters to invest in overseas entities using proceeds from specialized foreign currency accounts. This is expected to boost exporter confidence in repatriating funds.

Net IT exports, which reflect exports minus imports, reached $257 million in August, up 26% year-on-year, surpassing the 12-month average of $241 million. The IT sector is projected to grow by 10-15% in FY25, reaching $3.5-3.7 billion.

Systems Limited remains a top pick within the sector, currently trading at 12x 2024 PE and 9x 2025 PE.