Nifty IT rebounds from lows even as Accenture’s guidance disappoints; Mphasis, Coforge, Persistent Systems shares lead turnaround

CLSA maintains an optimistic outlook on select Indian IT firms.

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26 Aug, 2025 12:21

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Domestic IT services players erased their morning losses to trade with gains on March 21, extending a three-session winning streak, as global information technology player Accenture’s second quarter revenue guidance fell short of investor expectations.

Accenture is widely considered as a benchmark for Indian IT companies, offering insights into their likely performance. Accenture’s earnings report is a key indicator for the IT industry globally, including the Indian tech firms that rely heavily on services exports for revenue.

Accenture projected that its annual revenue for FY25 will grow between five percent and seven percent, as against its prior guidance range of four to seven percent.

Accenture's management also referred to an elevated level of uncertainty over the past few weeks, especially in public services, due to review and cuts of US government spending, which comes as a result of the Elon Musk-led DOGE (Department of Government Efficiency).

At 10.30 am, the Nifty IT was higher by 0.3 percent, staging a smart recovery after crashing over 2.5 percent on open. Mid-cap IT firms led the gains, with Mphasis, Coforge, and Persistent Systems shares jumping up to 3.5 percent. Nine out of 10 index constituents traded with gains, while Infosys was the sole laggard, lower by 1.3 percent at Rs 1,595.3 per share.

Despite the upwards revision of the revenue forecast, Accenture's shares crashed 10 percent on the New York Stock Exchange overnight as investors rushed to sell off their holdings.

Echoing the negative sentiment, ADRs, also known as American Depository Receipts, for Infosys and Wipro fell over three percent overnight. The domestic IT stocks might track this negative sentiment in trade today as well.

Hong Kong-based CLSA stated that eight percent of Accenture's overall revenue comes from US public services, which are seeing significant cutbacks. However, this headwind doesn't exist for Indian players.

Citi noted that its overall view on the Indian IT sector remains cautious. Despite the rupee depreciation, domestic technology firms will have difficulties improving margins. The brokerage reiterated its bullish call on HCL Technologies and Infosys over peers in the large-cap space, and Mphasis in the mid-cap space.

Domestic brokerage Nuvama Institutional Equities said, "While we stay positive on the sector in the medium to long-term, the near-term uncertainty is likely to remain an overhang on the stocks as well as the sector."

CLSA reiterated its outperform call on TCS, Infosys, Wipro and Tech Mahindra on the back of the continued improvement in the BFSI and CMT verticals at Accenture. As opposed to Citi, CLSA is optimistic stance on the Indian IT sector.

Also Read | Gen AI contributes 7% to Accenture’s Q2 new bookings amid growing adoption

Accenture's Q2 earnings at a glance

Second quarter new bookings for the second quarter of fiscal 2025 decreased by 3 percent to $20.9 billion sequentially. While consulting new bookings were $10.47 billion, managed services new bookings stood at $10.44 billion.

GAAP diluted earnings per share were $3.59, a 16 percent increase compared to $3.10 for the first quarter of fiscal 2024, and an increase of 10 percent over adjusted EPS of $3.27 for the first quarter last year.

The operating margin for the quarter stood at 16.7 percent, increasing 90 basis points (bps) year-on-year and 167 basis points sequentially.

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