Accenture’s Q1 FY24 Commentary Points To Unchanged Demand Environment: Motilal Oswal

Motilal Oswal Report

Accenture Plc , a key peer of Indian IT services companies, reported Q1 FY24 revenue growth of 1.0% YoY constant currency, at the upper end of the company guidance and a little above Bloomberg consensus.

But it continues to guide for near-term weakness, with Q2 revenue growth guidance of flat YoY growth at mid-point being below consensus expectations.

Accenture is maintaining its FY24 revenue growth guidance of 2-5% YoY CC, suggesting a potentially improved H2 FY24. However, this projection is partially influenced by the inorganic impact stemming from acquisitions (200 plus basis point YoY).

Management commentary suggested ongoing weakness in discretionary spend, which we expect to be echoed by its Indian IT peers as well.

On the other hand, good deal booking in Q1 (up 10% QoQ) was driven by outsourcing. This, along with a positive outlook on pipeline, should provide some comfort on FY25 for IT services companies.

We see the continued weakness in communication, media and technology as an ongoing overhang on Tech Mahindra Ltd. (~40% comm. exposure).

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