Accenture’s strong quarterly performance indicates better demand scenario for Indian IT pack

A better than expected performance by Accenture, a global IT consulting and outsourcing company, during the quarter ended May 2015 prompted investors to make fresh purchases in the counters of Indian IT exporters on Friday on hopes of a better demand in the US, the biggest IT outsourcing market. The S&P BSE Information Technology index rose by 1.4% at the end of the day amid weakness in the broader market reflected by a 0.3% drop in the benchmark Sensex.

Accenture, headquartered in Ireland and listed on New York Stock Exchange ( NYSE), reported earnings per share of $1.24 on revenue of $7.77 billion. The consensus analyst expectation was $1.23 per share earnings on a revenue of $ 7.59 billion. The company also raised the full year earnings growth forecast to 9-10% from earlier 8-10%.

The consulting division of the company reported faster growth than the outsourcing segment unlike in the previous few quarters. The North American market reported a double digit growth for the second consecutive quarter.
A sustained demand in the US market and a pick up in the discretionary projects are major positive factors for the top Indian IT exporters including Tata Consulting Services (TCS), Infosys, Wipro, and HCL Technologies. Indian players earn over two-third revenue from the US market, making it the biggest source of revenue.
“Spending in discretionary services within the US is substantiated by ACN’s (Accenture’s) performance in the region and in the consulting segment,” noted a Mumbai based broketrage, Motilal Oswal Securities, in its coverage on Accenture’s results.

Accenture's strong quarterly performance and a higher estimate for the fiscal raises hopes for Indian IT sector at a time when companies are facing the headwind of currency fluctuations. The industry body Nasscom has anticipated 12-14% dollar denominated revenue growth for the Indian IT services exports for FY16. The growth was 12.3% in FY15.

Among the top Indian IT players, HCL technologies gained the highest 3.3% on Friday and closed at Rs 957.8 on the BSE. The stock of TCS, the nation’s largest IT exporter, rose by 1.7% to Rs 2,594.1 whereas Infosys gained 1.5% and closed at 1,006.1.