TCS, Infosys, HCL Tech and Wipro are riding on Accenture's high
- The cheer around Accenture’s earnings is trickling to Indian IT stocks with Infosys, HCL Tech, Wipro and TCS rallying on December 17.
- Accenture beat revenue estimates, brought in $12.9 billion in new deals, and its utilisation hit a 10-year high of 93%.
- As outsourcing continues to remain one of the key drivers for Accenture and the likes of TCS, Infosys and HCL Tech have the most to gain from this wave.
AdvertisementAccenture saw its stock surge by 10% after its better-than-expected earnings on December 17. The company’s revenue beat market estimates, bookings were at a whopping $12.9 billion and its utilisation hit a 10-year high of 93%.
The company also increased its revenue guidance for the current fiscal year to between 4% to 6%, up from its previous forecast of 2% to 5% growth.
Meanwhile, in India, Infosys, HCL Tech, Wipro and TCS are reaping the benefits. Both TCS and Infosys have hit new 52-week highs on the exchanges today. “We see Accenture’s strong 1QFY21 performance as a positive for companies under our Indian IT Services coverage,” said Motilal Oswal in its report dated December 18.
Source: BSE, as of 10:00 am on December 17
|Company||% change in share price|
Outsourcing wave continues
Accenture's saw a 25% jump in new deals compared to last year between September and November. This includes 16 clients with over $100 million in bookings.
Source: Accenture's Q1FY21 earnings
As outsourcing continues to remain one of the key drivers for Accenture and the likes of TCS, Infosys and HCL Tech have the most to gain from this wave, according to Goldman Sachs.
Going forward, Accenture expects new deals to grow even further.
Everybody wants to be on the cloud — but who’s going to put them there?
Accenture credits its ramp up of new bookings to the growth of cloud adoption. Going forward, it expects its revenue from cloud services, which accounts for around 30% of its revenue, to grow in double-digits.
The company also invested $3 billion to create more assets to accelerate cloud migration.
AdvertisementHowever, it was suggested that Accenture is facing the same issue as the Indian IT services companies — a lack of talent. “The management sounded caution on the supply front, suggesting there is a scarcity of Cloud talent in the market,” noted Motilal Oswal.
Picking up new businesses on the cheap
Just like Accenture, these four Indian IT services giants have been on the road to pick up businesses on the cheap and bolster their digital services. The global IT giant closed 10 acquisitions this quarter that cost Accenture around $500 million.
By September next year, it expects to dole out another $1.2 billion as the trend of consolidation continues.
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