ISLAMABAD: Pakistan recorded monthly IT exports of US$330mn, up by 39% YoY and by 13% MoM in Oct-2024. These monthly IT exports in Oct-2024 are higher than last 12-month average of US$287mn. This is the 13th consecutive month of YoY IT export growth, starting from October 2023.
This takes 4MFY25 IT exports to ~US$1.21bn, up by 35% YoY.Pakistan’s exports witness 14% increase with SIFC’s support
YoY jump in IT exports is due to (1) IT export companies growing client base globally, especially in GCC region, (2) relaxation in the permissible retention limit by the State Bank of Pakistan, increasing it from 35% to 50% in the Exporters’ Specialized Foreign Currency Accounts, and (3) stability in PKR encouraging IT exporters to bring higher portion of profits back to Pakistan.
MoM increase in IT exports is due to higher number of working days in October (23) compared to September (20). Export proceeds per day were recorded at US$14.3mn for Oct-24 vs. US$14.6mn in Sep-24.
Pakistani IT companies are active in engaging with global clients. Recently leading IT companies of Pakistan attended Oslo Innovation Week 2024, and Pak-US Tech Investment Conference.
According to a Pakistan Software Houses Association (P@SHA) survey, 62% of IT companies are maintaining specialized foreign currency accounts.
A major development in FY25 was SBP adding a new category of Equity Investment Abroad (EIA), specifically for export-oriented IT companies. IT exporters can now acquire interest (shareholding) in entities abroad utilizing up to 50% proceeds from specialized foreign currency accounts. This development will further boost confidence of IT exporters to remit proceeds back to Pakistan.
Net IT Exports (Exports-Imports) displayed monthly number of US$299mn and increased by 47% YoY in Oct-2024. This is the highest ever monthly figure. These net IT exports numbers in Oct-2024 are also higher than last 12-month average of US$253mn.
We believe, IT sector will continue its growth trajectory and momentum with likely growth of 10-15% for FY25 to US$3.5-3.7bn.
Within the IT sector, Systems Limited (SYS) is our preferred pick. SYS is currently trading at 2024E and 2025F PE of 18.4x and 12.5x, respectively.
