Pakistan, January 17, 2024 : Pakistan recorded its highest-ever monthly exports of $303 million, up 17 percent MoM and 23 percent YoY in December 2023 with the average of $222 million in IT exports in the past 12-months.
According to the details, the IT sector witnessed a surge in its exports due to a relaxation in the permissible retention limit by the State Bank of Pakistan (SBP), increasing it from 35 percent to 50 percent in the Exporters’ Specialized Foreign Currency Accounts.
Furthermore, the stable PKR currency encouraged IT companies to repatriate their foreign income and deposit it in local accounts.
To highlight, the reported IT export number indicates the amount remitted back to Pakistan by technology companies.
As per the IT Minister, IT companies have parked an estimated $1-2 billion outside of Pakistan.
In the first half of fiscal year 2024, IT exports reached US$1.5 billion, marking a 9 percent year-on-year increase from the US$1.3 billion recorded in the same period of fiscal year 2023.
The net IT exports, calculated as exports minus imports, demonstrated a significant increase of 16% month-on-month and 13% year-on-year, reaching US$263 million in December 2023. These figures surpass the last 12-month average of US$197 million. In the first half of fiscal year 2024, net IT exports exhibited a 7% year-on-year growth, totaling US$1.3 billion.
The government’s recent initiative, the Pakistan Startup Fund, involves an annual investment of Rs2 billion in startups as equity-free capital. While these efforts are expected to generate positive momentum in the industry, a significant transformation is anticipated to take time.
Despite the growth in gross IT exports during the first half of fiscal year 2024, achieving the government’s ambitious target of reaching US$5 billion appears challenging. Projections suggest that gross IT exports for fiscal year 2024 may fall within the range of US$3-4 billion, compared to the US$2.6 billion recorded in the previous year.
In the realm of the IT sector, Systems Limited (SYS) stands out as our preferred pick. As of 2024, SYS is currently trading at a price-to-earnings (PE) ratio of 10.5x and a price-to-sales (PS) ratio of 1.8x.
