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Last Updated : Mar 29, 2019 02:13 PM IST | Source: Moneycontrol.com

Accenture reports strong Q2 earnings, guidance; Indian IT firms to benefit

CLSA said strong growth in US is positive for most firms, but more for Infosys & Cognizant while strong growth in CMT is positive for Tech Mahindra, Wipro & HCL Technologies

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Ireland-based software firm Accenture delivered strong earnings growth for second quarter and raised its full-year revenue growth guidance, which lifted sentiment in IT stocks on March 28.

The Nifty IT index rallied 1.48 percent in the previous session and on March 29, it gained 0.16 percent in morning trade.

Accenture has reported net income of $1.12 billion in second quarter ended February 28, a 30 percent higher compared to $863.7 million in same period last year.


Its revenue increased 5.5 percent to $10.45 billion YoY, beating analyst estimates, benefitting from investments in digital and cloud service.

Revenue estimates were at $10.30 billion, according to IBES data from Refinitiv. The growth was at upper-end of its guidance.

"Accenture's earnings signal strong demand and reported strong growth was led by consulting, US & resources," CLSA said.

The consulting and outsourcing services provider hiked its full-year earnings per share forecast range to $7.18 to $7.32, from $7.01 to $7.25, and constant currency revenue growth guidance to 6.5-8.5 percent from 6-8 percent earlier.

"Lifting of revenue growth guidance for FY19 indicates buoyancy in demand," Macquarie said, adding so far there is no impact of macro uncertainties in client willingness to spend and impact of extended US shutdown was limited on Accenture.

The software firm recorded new bookings of $11.8 billion, which grew by 15 percent YoY.

"Order bookings were robust across both consulting/outsourcing business for Accenture while soft trends continued in BFSI & healthcare," Credit Suisse said.

Brokerages feel Accenture's strong broad-based growth is positive for Indian IT companies.

"There is some comfort on solid near-term demand trends for Indian IT companies, but BSFI, which makes up a third of revenues for India IT, remained soft in Q2," Credit Suisse.

CLSA said strong growth in US is positive for most firms, but more for Infosys & Cognizant while strong growth in CMT is positive for Tech Mahindra, Wipro & HCL Technologies.

Nature of demand with stronger consulting & apps is better for Infosys & HCL Technologies and stronger operations demand is a positive for TCS, it added.

Macquarie's top picks in largecap Indian IT space are TCS & HCL Technologies, and in Midcaps, top pick is L&T Infotech.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
First Published on Mar 29, 2019 02:13 pm