Consulting major Accenture's higher guidance for the full year as well as the second quarter has sent the share price higher by more than 7% in US market, also rubbing off on the ADRs of Indian IT companies Wipro and Infosys, which are up by 2.3% and 3% respectively in early trade on December 19 at the New York Stock Exchange.
Headwinds relating to the currency market and worries over the government spending had dampened street expectations on revenue growth. However, the global IT major beat Wall Street estimates on the back of demand from clients for AI-powered tools, as CEO Julie Sweet pointed the 'strong start to fiscal 2025'. Accenture's GenAI business clocked new bookings worth $1.2 billion during Q1FY25.
The first quarter revenue had come in at $17.7 billion, beating analysts' estimates, as per data from LSEG quoted by Reuters. The company's EMEA geography delivered a revenue of $6.41 billion, a growth of 10% on year in dollar terms.
"First quarter new bookings were $18.7 billion, including 30 quarterly client bookings of more than $100 million," Julie Sweet, chair and CEO, Accenture said in the press statement. Accenture added that it expects annual revenue to grow between 4-7%, higher than its earlier growth forecast of 3-6%, and second quarter revenue is seen growing between $16.2-16.8 billion.
Accenture also declared another quarterly cash dividend of $1.48 per share for shareholders, which is 15% higher than a year ago.
Accenture's 'strong start to fiscal' could provide a trigger to the IT index on December 20, which ended lower by a percent, tracking across-the-board weakness after the Fed-fuelled selloff. On a one-month basis, the index is higher by only 1.8%.
Read More: Accenture’s headcount grows second quarter in a row, up over 24,000 in Q1FY25
In the US, there is an anticipation of a gradual demand recovery in the BFSI space on hopes of improved deal closures in 2025. An HDFC Securities note said a higher single-digit revenue growth could lead to mid-teen earnings growth next year, however, rich valuations may keep upside under check.
In a recent note on IT companies, CLSA had said that the US recovery particularly in the BFSI space, was getting broad-based, and leading companies like TCS, Infosys and Wipro are more confident of the improving sentiments among their clients. However, Infosys is getting into a seasonally weak H2FY25 with fourth quarter being even weaker than the third one.
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