19 Mar , 2021 By : kanchan Joshi
Global IT services provider Accenture posted decent Q2 earnings aided by double-digit growth in its outsourcing segment. In Q2, its revenues rose to $12.1 billion beating its guided range of $11.55 billion-11.95 billion. However, a key takeaway for investors in Indian IT stocks is Accenture's revised revenue growth guidance.
The company raised its FY21 revenue growth guidance in local currency from 4-6% to 6.5-8.5%. Operating margin is seen expanding by 30-40 basis points from 14.8-15% guided earlier to 15-15.1%. One basis point is one hundredth of a percentage point. Accenture's financial year ends on August 31.
Analysts say, Accenture's new guidance bodes well for tier-1 Indian IT companies such as Tata Consultancy Services (TCS) and Infosys, among others.
According to Nirmal Bang Securities Ltd, the new guidance implies that 2HFY21 will see Accenture post 11.5% growth in local currency terms. "This period coincides with 1HFY22 of Indian IT services players. Outsourcing (where Accenture competes directly with Indian IT players in a significant way) already hit double-digit local currency growth in 2QFY21. This indicates that the street’s expectations of mid-teen growth for Tier-1 India heritage players -TCS, Infosys and HCL Tech- in FY22 is not misplaced," the domestic brokerage house said in a report on 19 March.
Sharing a similar view, analysts at Emkay Global Financial Services said that a broad-based demand recovery and sustained growth momentum in revenue/order booking of the outsourcing business augur well for Indian IT peers.
Foreign research house Credit Suisse believes that Accenture’s strong revenue and bookings growth reaffirms its view that IT services has entered a technology up-cycle.
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