homebusiness Newscompanies NewsAnalysts say more positives than negatives for Indian IT post accenture results, some remain cautious
Analysts say more positives than negatives for Indian IT post accenture results, some remain cautious
Brokerages said that the valuation of Indian IT have turned reasonable after the recent underperformance.
The street is divided over the outlook for Indian IT companies like Infosys, TCS, HCLTech and Wipro among others after Accenture's quarterly results on Thursday evening.
While most analysts believe that the results will provide some comfort to stocks post the recent underperformance, some chose to remain cautious and expected to hear individual commentaries post their respective quarterly results.
The key takeaway from Accenture's results was the company's record order bookings at $22.2B. It reported constant currency revenue growth of 9 percent, which was within the 6-10 percent guidance range. It also trimmed the upper end of its revenue guidance range to 8-10 percent from 8-11 percent earlier. Accenture will also layoff close to 19,000 workers or 2.6 percent of its workforce, resulting in a one-time charge of $1.5 billion.
Here's a look at what analysts had to say for Indian IT post Accenture's results:
Morgan Stanley
The brokerage believes that Accenture's results has more positives than negatives for Indian IT. It expects some positive sentiment from technology stocks, given their recent underperformance.
Morgan Stanley also said that more than the BFSI worries, a slowdown in hi-tech and communication verticals in North America came up as a bigger negative.
However, the firm said that any potential weakness around the quarterly results and next year's guidance should be viewed as a buying opportunity. Within the largecaps, LTIMindtree, Infosys, and HCLTech are the brokerage's preferred picks.
Nomura
Nomura has retained its cautious stance on the sector and said that it prefers largecap stocks over midcap names. It said that demand continues to shift towards cost optimism.
The brokerage also said that it expects operating performance to vary significantly across IT companies for the nextg financial year.
Infosys and Tech Mahindra rank among its preferred picks within the largecap space, while Coforge and Persistent System are its top midcap picks.
CLSA
CLSA believes that the services revenue and order bookings is a positive read through for Indian IT. It said that Accenture's order bookings should give comfort to investors on the growth outlook for the next financial year.
The comfort should come given that valuations have turned reasonable after the recent correction.
The brokerage has maintained its stance of playing the sector selectively. Infosys, HCLTech, TCS are their top picks from within the space.
Citi
The brokerage said that although managed services bookings were strong during the quarter and will have a positive read through, investors will await commentary on guidance from Infosys and HCLTech.
However, Citi remains cautious on the Indian IT sector, given the tough macro environment.
Infosys is their only buy within the sector.
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