Pakistan recorded monthly IT exports of US$313mn in Jan-2025, up by 18% YoY while down by 10% MoM. These monthly IT exports in Jan-2025 are higher than the last 12-month average of US$303mn. This is the 16th consecutive month of YoY IT export growth, starting from October 2023. This takes 7MFY25 IT exports to US$2.18bn, up 27% YoY.
§ Export proceeds per day were recorded at US$13.6mn for Jan-25 vs. US$16.6mn in Dec-24.
§ 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, (3) allowance of equity investment abroad through these foreign currency accounts and (4) stability in PKR encouraging IT exporters to bring higher portion of profits back to Pakistan.
§ Pakistani IT companies are active in engaging with global clients. Recently, leading IT companies of Pakistan attended Oslo Innovation Week and the Pak-US Tech Investment Conference.
§ According to a Pakistan Software Houses Association (P@SHA) survey, 62% of IT companies maintain specialized foreign currency accounts.
§ A major development in FY25 is that SBP has added a new category of Equity Investment Abroad (EIA), specifically for export-oriented IT companies. IT exporters can now acquire interest (shareholding) in entities abroad by utilizing up to 50% of the proceeds from specialized foreign currency accounts. This development will further boost the confidence of IT exporters to remit proceeds back to Pakistan.
§ Net IT Exports (Exports-Imports) displayed a monthly number of US$281mn, an increase of 17% YoY and 27% MoM. These net IT export numbers in Jan-2025 are higher than the last 12-month average of US$261mn.
§ We believe the IT sector will continue its growth trajectory and momentum, with likely growth of 10-15% for FY25 to US$3.5-3.7bn. Under the Uraan Pakistan national economic plan, the government has set a target of US$10bn in IT exports by FY29. This implies a target CAGR of 28% until FY29.
§ Within the IT sector, Systems Limited (SYS) is our preferred pick. SYS trades at 2025F and 2026F PE of 15.0x and 11.2x, respectively.
Courtesy- Topline Pakistan Research
