New Delhi [India], April 16 : US tariff uncertainties will impact manufacturing, logistics and retail verticals the most, given their reliance on global supply chains, according to a report by Jefferies.
"Tariff uncertainties are likely to impact manufacturing, logistics and retail verticals the most given their reliance on global supply chains." the report said
The report added that the rising prospects of a US recession may lead to rate cuts, which in turn will hurt the BFS vertical.
Jefferies further added that the sectors such as communications, insurance and healthcare are likely to be the least impacted verticals from the reciprocal tariffs.
The report says that the US-based Information and Technology companies will also be impacted adversely, affecting the US GDP growth outlook.
"US Govt.'s tariff announcements may not only impact US GDP growth outlook but are likely to impact US-based multinational corporations (clients of Indian IT firms) more. Rising uncertainty and a potential worsening of business outlook will hurt new deal signings and discretionary IT spends," the report added.
The report pointed out that IT companies are likely to face difficulties in expanding their profit margins due to weak demand. The report cited four key reasons for this.
First, cost-saving contracts, which are becoming more common, usually offer lower margins in the initial years.
Second, with reduced demand, competition among firms is expected to rise, leading to pricing pressure.
Third, to manage costs, IT companies may increasingly rely on subcontractors instead of hiring full-time employees, helping reduce fixed expenses but affecting overall profitability.
Lastly, the report said that a potential weakening of the US dollar against the Indian rupee could negatively impact margins.
As a result, margin estimates for the financial year 2026-2027 (FY26-27) have been cut by up to 100 basis points, and overall marginsexcluding TCS and Tech Mahindraare expected to remain flat at FY25 levels, the report added.
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