What Accenture's Q4 Result Means For Indian IT Companies: Axis Securities

Axis Securities Report

Accenture Plc’s reported Q4 FY24 results stood in line with street expectations on all financial and operational terms. Revenue for the quarter stood at $16.4 billion, registering a growth of 3% (in US$ terms) and 5% (in local currency) on a YoY basis.

The company registered GAAP EPS of $2.66 for the quarter while adjusted EPS stood at $2.79, reporting 3% YoY growth. The company’s new bookings stood at $20 billion, managed services book/bill was at $11.6 billion, and consulting business bookings stood at $8.3 billion.

Overall Q4 FY24 bookings have been resilient, indicating robust demand despite prevailing uncertainties. The company has robust client relationships, which is reflected in the top 30 clients with quarterly bookings of ~ $100 million. The company continues to witness strong demand for Gen AI – the great accelerator of reinvention – with over $1 billion in new bookings.

Impact on Indian IT Services Companies

We believe strong investments in new-edge technologies such as Digital Technologies, Cloud Transformation, IoT, Generative AI, and Machine Learning across verticals will support and accelerate the company’s revenue growth moving forward.

However, near-term macroeconomic headwinds may impact the automation spend across verticals. On a vertical front, the BFSI vertical witnessed a stronger impact due to a fall in the rural banking sector from North America.

On the other hand, industries including manufacturing, automobile, retail, pharmaceutical, and healthcare are witnessing strong traction across geographies. IT services companies in India are receiving strong deal bookings despite near-term challenges.

While we remain optimistic about the long-term prospects of IT services companies in India, near-term challenges may impact their earnings growth momentum.

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