Accenture shares upgrade 7% on higher guidance and strong quarter; Wipro, Infosys ADRs rise 2-3%

Consulting major Accenture’s higher guidance for the full year as well as the second quarter has led to a more than 7% rise in its share price in the US market in early trade, which also impacted ADRs of Indian IT majors Wipro and Infosys, which rose 2.3% and 3%, respectively, in early trade on the New York Stock Exchange on December 19.

Currency market-related headwinds and concerns over government spending had dampened market expectations on revenue growth. However, the global IT major beat Wall Street estimates on the back of customer demand for AI-powered tools, as CEO Julie Sweet pointed to a ‘strong start to FY25’.

Accenture’s GenAI business recorded new bookings of $1.2 billion during Q1FY25. According to LSEG data cited by Reuters, first quarter revenues came in at $17.7 billion, above analysts’ estimates. The company’s EMEA geography delivered revenues of $6.41 billion, a 10% increase year-on-year in dollar terms. “New bookings in the first quarter were $18.7 billion, including 30 quarterly client bookings of over $100 million,” said Accenture president and CEO Julie Sweet in a press statement. Accenture said it expects annual revenue to grow between 4-7%, up from its earlier 3-6% growth forecast, and sees second quarter revenue growing to between $16.2-16.8 billion.

Accenture also declared another quarterly cash dividend of $1.48 per share for shareholders, up 15% from a year ago.

Accenture’s ‘strong start to the fiscal year’ could boost the IT index on December 20, which ended a percentage point lower given weakness across sectors following the Fed-led sell-off. On a one-month basis, the index is only 1.8% higher.

In the US, gradual demand recovery is expected in the BFSI space on expectations of better deal closures in 2025. High single-digit revenue growth could lead to mid-teens earnings growth next year, a note from HDFC Securities said, however, high valuations could keep the upside in check.

In a recent note on IT companies, CLSA had said the US recovery is broadening, especially in the BFSI space, and key companies such as TCS, Infosys and Wipro are more confident about improved sentiments among their clients. However, Infosys is entering a seasonally weak H2FY25, with the fourth quarter being even weaker than the third quarter.