Accenture’s FY24 Guidance Unexciting But Implies Positive Pick-Up In H2: Motilal Oswal
H1 weakness to weigh on sector valuation in the near term.
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Accenture plc, a key peer of Indian IT services companies, reported Q4 FY23 revenue growth of 4.0% YoY constant currency, marginally below the Bloomberg consensus and at the mid-point of its guidance.
More importantly, the company provided a modest FY24 revenue growth guidance of 2-5% YoY CC, with weak H1 followed by a recovery in H2. While Accenture’s guidance is broadly in line with our expectation of a growth pickup for its Indian IT peers in FY25, its Q4 performance and Q1 FY24 outlook would add to concerns over the near-term demand environment.
Additionally, Q4 deal booking declined 3% QoQ versus company guidance of flat growth, implying lower visibility on demand in the current environment.
Accenture's management highlighted communication, media and technology and North America as the key weak areas, which we see as negative for Tech Mahindra Ltd. (c40% Comm. exposure).
In our view, Accenture’s commentary implies near-term weakness for Indian IT companies.
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