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Accenture shares ended 7% higher in response to the results. US-listed shares of Infosys and Wipro also saw gains of up to 4% overnight.
Brokerage firm Jefferies has picked out Infosys, TCS and Coforge as its top picks within the IT space.
Jefferies wrote in its note that the large deals ramping up faster than anticipated for Accenture is a positive and that despite an unchanged demand environment, strong net hiring with declining utilisation suggests better revenue visibility.
Accenture’s BFSI vertical grew by a strong 10% on a sequential basis during the quarter and Jefferies believes that this will have a positive read through for stocks like Coforge, TCS, Wipro and LTIMindtree.
Citi prefers Infosys among other IT companies, while it has a “neutral” rating on HCLTech.
The brokerage maintained its view that a gradual but uneven recovery is underway and that the brokerage remains cautious as the Nifty IT index is trading at 31 times financial year 2026 consensus EPS.
CLSA too remains “cautiously optimistic” on Indian IT with an “Outperform” rating on Persistent Systems, Tech Mahindra and Wipro, while an “Underperform” rating on LTIMindtree.
The brokerage said that Accenture’s guidance upgrade is more company specific and Indian IT vendors have had weak order book growth for the last two quarters.
This implies that they may possibly be losing out to Accenture, particularly on large deals. Amidst no major discretionary demand revival, the potential for further guidance upgrades by Infosys and HCLTech during the quarter remains limited.
Nuvama maintains its positive stance on the Indian IT space as it believes that Accenture results are typically a leading indicator for Indian IT services.
The brokerage said that the upgrade to Accenture’s guidance was due to faster execution of deals won earlier, which augurs well for Indian IT companies.
JM Financial wrote in its note that Infosys, Wipro, Tech Mahindra among largecaps and Mphasis and Persistent Systems among the midcaps are their preferred picks within the IT sector.
It stated that Accenture’s read through for Indian IT is neither particularly positive nor necessarily negative and that a still anaemic discretionary environment pushes out hopes of a rapid rebound.
The brokerage advises stickig to players with earnings resilience or valuation comfort.
First Published: Dec 20, 2024 7:49 AM IST
