Heavy rains and floods in and around Chennai, which is home to many auto manufacturing and IT companies has affected the business activity in the city.
Heavy rains and floods in and around Chennai, which is home to many auto manufacturing and IT companies has affected the business activity in the city. Many IT and automobile firms, including Cognizant, Infosys, TCS, Hyundai, Ford and Renault, have temporarily closed offices and manufacturing plants.
Market experts said that Chennai rains would not impact the financials of IT companies based in Chennai.
“Chennai rains and floods would affect the sales figure of auto companies, but not affect the business of software companies,” Prakash Diwan, market expert, prakashdiwan.in said.
G Chokkalingam, founder, Equinomics Research & Advisory second Diwan’s comments and said that fundamentally rainfall will not impact IT companies”. However, it may hurt investor sentiments, he added.
Infosys has declared Wednesday and Thursday as holiday in Chennai. According to IDFC Securities, TCS has the highest and Tech Mahindra has lowest number of employees (as a percentage of total) in Chennai that handle projects for companies like Walmart, Citigroup, AstraZeneca, JPMorgan etc. A day of work lost could have a 50 basis points impact on revenue growth of companies have already lost 1.5 days of work.
According to Assocham, the financial loss due to record-breaking rainfall in Chennai and several parts of Tamil Nadu may even exceed Rs 15,000 crore mark as Chennai has come to a virtual standstill and is in the grip of fear and panic.
Shares of IT services companies fell on Thursday as rains in Tamil Nadu hit normal business activities. Infosys fell 0.40 per cent, while TCS declined 0.61 per cent. Most Indian IT companies have 10-30 percent of their workforce based in Chennai, the capital of Tamil Nadu.