- Infosys ADR dropped up to 4% after Accenture's Q3 results impacted IT sector outlook
- Wipro ADR declined 0.8% to $39.70 following Accenture's trimmed revenue forecast
- Accenture narrowed full-year revenue growth forecast to 3%-4% from 4%-5% earlier
The American Depository Receipts of Infosys Ltd. and Wipro Ltd. fell up to 4% after software giant Accenture Plc.'s third quarter results on Thursday imoacted Indian IT sector's outlook.
Infosys ADR declined as much as 4% to $11, while Wipro slipped 0.8% to $39.70. As of 7:35 a.m. EST, Infosys ADR was down 3.8% to $11.25.
Accenture's financial performance remains key, not the wall street but also for the IT sector back in India as it shapes investor and market expectation for growth of software companies in an AI-dominated atmosphere.
The company has narrowed its full year revenue forecast to a range of 3% to 4% in local currency from 4% to 5% earlier; though, excluding the 1% impact from its from US federal business, the revenue growth is seen in the 4% to 5% range.
ALSO READ: Accenture Earnings: Revenue Forecast Trimmed; New Bookings Slip To $19.3B; Shares Slump 12%
The software giant's new bookings fell to $19.3 billion from $19.7 billion in the year-ago quarter. Revenue rose by $1 billion to $18.7 billion, marking a 6% increase in US dollar terms and 3% growth in local currency.
Profitability grew as accenture expanded its operating margin by 20 basis points to 17%, while diluted earnings per share climbed 9% to $3.80.
The forecast trim is a big blow to the already vulnerable IT sector. Earlier this month, global software companies along with Indian IT giants had suffered a selloff after brokerages downgraded Accenture's rating and cut its target price.
Truist downgraded Accenture to 'hold' and slashed the target price to $210 from $269. Similarly, Citi cut the company's target price to $195 from $215 while maintaining a 'neutral; rating.
Brokerages cited AI-led pressure on outsourcing budgets and deal sizes for their downgrades. Truist flagged that AI-native firms are increasing competition for IT services. Concerns have also risen over artificial intelligence headcount-based pricing models.
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