25 Jun , 2021 By : Kanchan Joshi
Global IT company Accenture reported robust earnings for Q3FY21. Its revenue at $13.3 billion was $300 million above the top end of the guided range. In local currency terms, revenues increased by 16% and 21% in USD terms on a year-on-year (y-o-y) basis.
Analysts say, this is reflective of a faster conversion of order book to revenue of many of its projects. The company follows September-August as its financial year.
Importantly, the company raised its FY21 revenue growth guidance from 6.5-8.5% a quarter back to 10-11% in local currency terms. At the beginning of FY21, the company's revenue growth guidance was 2-5%. Analysts see the company's robust 3QFY21 performance and commentary as a positive read-across for Indian IT companies as it indicates continued demand in key industries.
"Accenture's strong FY21 revenue number indicates that street’s expectations of mid-teen growth for Tier-1 Indian heritage players - TCS, Infosys and HCL Technologies - in FY22 is not misplaced. We are expecting the trio to deliver 13-15% USD growth in FY22 (not including any inorganic elements from here on)," analysts at Nirmal Bang Institutional Equities Ltd, said in a report.
Sharing a similar view, analysts at Motilal Oswal Financial Services Ltd said, "Accenture's performance and comments reinforce our stance that demand trends, order book, and deal velocity remain robust for the sector. Strong growth and higher book-to-bill ratio in the outsourcing business (1.2 times) resonates well for Indian IT."
In terms of order inflow, Accenture saw a 39% growth in 3QFY21 to $15.4 billion with outsourcing order inflow up 52% at $7.4 billion. The management said that the pipeline continues to be strong even for large deals. It should be noted that in the outsourcing segment, Accenture competes directly with Indian IT players in a significant way. Analysts say, this is a pointer to better visibility on the low teen growth expectation that the street has from the Indian players for FY23.
On the flip side, increased attrition remains a concern for the industry, as higher employee cost would put pressure on profitability.
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