Most IT stocks, including TCS, Wipro, Infosys, HCL Technologies, and Tech Mahindra witnessed healthy buying interest in morning deals on Monday, 5 October, boosted by strong Q4 results from global consulting and IT services major Accenture.
The Nifty IT index jumped 1.6% during the session, before succumbing to profit booking and slipping into the negative territory. On 1 October, after Accenture’s earnings, the index closed 2.17% higher.
Accenture is a $74 billion consulting and IT services giant, which works with 80% of the global 500 corporations.
Its majority of workforce is based in the low-cost global delivery network, such as India, Philippines, etc., and outsourcing accounts for about 47% of its revenue, which makes it critical to understanding the business dynamics of offshore IT/ITES industry.
Accenture’s Q4 results
Global consulting giant Accenture on 1 October reported fourth-quarter GAAP earnings of $3.29 per share, beating analysts’ estimate by 11 cents. Revenue rose 6.3% year over year to $18.7 billion, exceeding expectations by about $660 million.
Consulting revenue totalled $9.28 billion in the fourth quarter, above analysts’ expectations, while revenue from its communications, media and technology segment jumped 11% to $3.26 billion during the quarter.
For fiscal year 2027, the Dublin-headquartered firm expects revenue growth of 3% to 6% in local currency. It forecasts GAAP diluted earnings per share of $14.39 to $14.81, compared with analysts’ average estimate of $14.67.
How could Accenture’s Q4 results impact Indian IT stocks?
The Nifty IT index is down 25% year-to-date due to concerns over weak demand, persistent macroeconomic uncertainties, cautious discretionary spending, and AI-led disruption to the traditional book of business.
Ajit Mishra, SVP – Research, Religare Broking, believes Accenture’s stronger-than-expected FY27 revenue growth guidance is a positive signal for the Indian IT sector.
“Accenture’s FY27 revenue growth guidance suggests that enterprise technology spending is holding up better than feared and that AI adoption is increasingly translating into revenue-generating projects,” said Mishra.
However, Mishra quickly added that the recovery is unlikely to be uniform, as pricing pressure, cautious discretionary spending, and AI-led productivity gains being passed on to clients may keep margins and traditional services growth curtailed.
According to Mishra, the key takeaway from Accenture’s earnings is that AI is emerging as both a growth opportunity and a business-model challenge for IT services companies.
“Investors should look for evidence of improving deal conversion, revenue growth and margin resilience in upcoming results before treating this as a broad-based sector recovery,” said Mishra.
Ravi Singh, Chief Research Officer from Master Capital Services, has similar views.
He said Accenture’s 3-6% FY27 revenue guidance offers relief to beaten-down Indian IT stocks and supports a tactical rally. However, tier-1 growth is likely to remain soft, while AI disruption and uneven demand remain concerns.
“Investors should avoid chasing the rally and prefer selective, stronger players, particularly tier-2 names showing better growth. The key focus will now be on Q2 results, management commentary and whether improving AI-led demand can translate into sustainable growth,” said Singh.
On the other hand, brokerage firm Emkay Global Financial Services, Accenture’s Q4 print, which was driven by small deals, faster mobilisation, and federal over-delivery, is mildly reassuring for Indian IT services.
“Broad-based growth, a revenue beat, and healthy FY27 guidance indicate enterprise technology demand remains resilient, although the underlying demand environment, particularly discretionary spending, has not materially improved,” said Emkay.
According to Emkay, the read-through of Accenture’s results for Indian IT is limited given their lower consulting exposure and different book of business.
“Beyond the near-term demand signal, Accenture’s increasing investments in AI, talent, ecosystem partnerships, R&D, and M&A raise the competitive bar for Indian IT, while its shift toward IP-, platform-, and outcome-led offerings could accelerate the move away from the traditional FTE-led model and intensify competitive pressure over the medium term,” said Emkay.
The brokerage firm prefers TCS, Infosys, LTM, HCL Tech, Tech Mahindra, and Wipro among large-caps, in that order.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
