Seven IT stocks fell by 0.39% to 1.74% after the American IT firm Accenture kept its FY 2023 guidance unchanged, reportedly hinting towards a possible pullback in client spending.
The Nifty IT index slipped 0.63% to 28,520.10, extending losses for the third day. The index has declined 4.02% in three sessions.
Coforge (down 1.74%), Infosys (down 0.98%), Tata Consultancy Services (down 0.92%), Persistent Systems (down 0.89%) and Wipro (down 0.64%) were the top losers.
Among the other losers were HCL Technologies (down 0.45%), L&T Technology Services (down 0.39%).
US-based Accenture reported financial results for the first quarter of fiscal 2023, ended November 30, 2022, with revenues of $15.7 billion, an increase of 5% in U.S. dollars and 15% in local currency over the same period last year.
Diluted earnings per share were $3.08, an 11% increase from $2.78 for the first quarter last year.
Operating income was $2.59 billion, a 7% increase over the same period last year, and operating margin was 16.5%, an expansion of 20 basis points. Operating cash flow was $495 million and free cash flow was $397 million.
Net income for the quarter was $2 billion, compared with $1.82 billion for the first quarter last year.
New bookings for the first quarter were $16.22 billion, a 3% decrease in U.S. dollars and a 6% increase in local currency from the first quarter last year. Consulting new bookings were $8.11 billion, or 50% of total new bookings. Managed Services new bookings were $8.11 billion, or 50% of total new bookings.
With respect to second quarter fiscal 2023 outlook, Accenture said that it expects revenues for the second quarter of fiscal 2023 to be in the range of $15.20 billion to $15.75 billion, an increase of 6% to 10% in local currency, reflecting the company's assumption of an approximately negative 5% foreign-exchange impact compared with the second quarter of fiscal 2022.
With regard to its fiscal year 2023 (FY 23), the IT giant said that its business outlook for the full 2023 fiscal year now assumes that the foreign exchange impact on its results in U.S. dollars will be approximately negative 5% compared with fiscal 2022; the company previously expected a negative 6% foreign-exchange impact.
For fiscal 2023, the company continues to expect revenue growth to be in the range of 8% to 11% in local currency.
Accenture continues to expect operating margin for the full 2023 fiscal year to be in the range of 15.3% to 15.5%, an expansion of 10 to 30 basis points from fiscal 2022.
For fiscal 2023, the company continues to expect operating cash flow to be in the range of $8.5 billion to $9.0 billion; and free cash flow to be in the range of $7.7 billion to $8.2 billion.
A foreign brokerage has reportedly said that Accenture's implied H2 FY23 growth guidance of 5.6-9.6% YoY in constant currency terms as against 25% YoY in constant currency terms in H2 FY22 suggests a sharp revenue growth moderation for Indian IT in FY24. The report further states that the global research house believes that increasing client focus on larger cost optimization deals and slowdown in smaller deals position larger IT firms more favorably than mid/small sized firms. A cooling off of the job market, lower attrition and more prudent hiring are likely to lower support margins, but wage inflation remains high, it reportedly said.
The weak commentary from Accenture comes in the aftermath of HCL Technologies' management indicating that FY23 revenue growth will be at the lower end of earlier guidance.
Chief executive officer C Vijayakumar at company's Investor Day (8 December 2022) said: "In October, we had increased our guidance from 13.5% to 14.5%. We had certain assumptions which helped us to devise 16-17% services growth. We had assumed certain furloughs. But we are seeing a bit higher. BFSI is the segment which is little bit impacted by furloughs, followed by tech companies."
Last month, Cognizant Technology Solutions Corp had reportedly slashed its revenue and profit guidance for this year, citing higher costs and pullback in contracts.
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
