The American Depository Receipts (ADRs) of Infosys and Wipro slipped up to 10% on the NYSE Thursday after Accenture lowered its annual revenue growth guidance.
Infosys ADR price ended 9.71% lower at $10.56 apiece on Thursday after falling more than 10% during the session. Wipro ADR closed 3.63% lower at $2.39 apiece. During the session, Wipro ADR price dropped over 9% to an intraday low of $2.25 apiece on NYSE.
The fall in Infosys and Wipro ADRs came after IT services giant Accenture narrowed the upper end of its full-year revenue growth forecast, sending its shares down more than 17% and sparking an industry selloff.
Meanwhile, Cognizant shares tanked over 10% and IBM shares slid more than 5% and Capgemini closed down 8.9%.
Accenture lowers guidance
Accenture now expects annual revenue growth of 3% to 4% in constant currency terms, a decline from its earlier outlook of 3% to 5%. The company expects revenue growth of 4% to 5%, down from its previous forecast of 4% to 6%, excluding the roughly 1% impact from its US federal business.
It forecast fourth-quarter revenue between $17.75 billion and $18.4 billion, below analysts’ average estimate of $18.47 billion, according to data compiled by LSEG.
The IT consulting giant took a $400 million hit to its Middle East business from the conflict in the third quarter and warned of “more impact in the fourth”.
In the third quarter, the company’s new bookings fell about 2% to $19.3 billion. Its revenue rose 6% to $18.72 billion, missing estimates of $18.75 billion.
Accenture said it plans to spend $9 billion on acquisitions this year, up from $5 billion, as it leans harder into AI, cloud and data, areas where clients are concentrating spending on large projects tied to cost savings and growth.
Impact on Indian IT Companies
Accenture’s commentary was slightly negative as moderating Q4 guidance, a lower FY guidance mid-point, and softer deal bookings point to near-term growth pressure amid a challenging macro backdrop, said Dipeshkumar Mehta, Senior Research Analyst at Emkay Global Financial Services Ltd.
The management indicated that AI is not expanding client budgets, with spending largely being reallocated, challenging the near-term ‘AI lifts the wallet’ thesis. Clients are increasingly shifting toward ready-to-deploy solutions, creating opportunities in embedded expertise, data-led offerings, and IP/platform-based models.
“Accenture is therefore pursuing a ‘build, buy, and partner’ strategy while allocating more capital toward higher-growth, non-FTE, product- and platform-led areas where Indian peers remain underpenetrated. Accenture Edge, targeting the companies in the $300 million – $3 billion revenue segment, could pose a challenge for Indian players that cater to this mid-market client base, as Accenture brings enterprise-grade scale, delivery quality, and strong ecosystem-led pull-through,” Mehta said.
Choice Broking said Accenture’s commentary suggests that AI is becoming an increasingly meaningful demand driver; however, it remains insufficient to offset near-term weakness from discretionary spending pressures, elongated deal cycles and delayed large-program conversions.
“Therefore, we continue to expect a gradual recovery trajectory for Indian IT rather than a broad-based acceleration in FY27. Within Tier-1, we prefer Infosys and Tech Mahindra and among mid-caps we have Persistent Systems and Coforge as our preferred ideas,” said the brokerage firm.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
