Accenture's revenue outlook cut sends IT stocks crashing
economictimes.indiatimes.comAccenture's reduction in revenue growth guidance dented hopes of demand recovery. Analysts said the cautious sentiment in IT stocks may persist for a while with their business prospects expected to remain modest at least in 2024. TCS, Infosys, Cyient, Mastek, and LatentView are among some of analysts' top picks.
Nifty IT declined 2.33% on Friday while the benchmark Nifty gained nearly 0.4%.
«The lowering revenue guidance implies that a recovery in IT companies is only likely at the end of FY25,» said Pankaj Pandey, head of research, ICICI Securities. «The next few quarters are expected to be muted for IT companies which triggered the negative reaction.»
LTI Mindtree fell 2.9% on Friday while Infosys and Wipro declined 2.8% and 2.5%, respectively. Tata Consultancy Services dropped 1.6% and HCL Technologies fell 2.4%.
Analysts said other large cap IT companies too may report cuts in revenue guidance in the March quarter. Mid-tier IT companies are expected to witness sharper cuts.
«The slump in IT stocks is because market leader like Accenture has cut back its revenue estimates sharply which indicates that the hope of improving discretionary spend is fading away,» said Sumit Pokharna, VP and IT analyst, Kotak Securities.
Pokharna said since Accenture has reduced revenue estimates, other IT companies engaged in short-cycle discretionary projects like Wipro, Infosys, and Mphasis are adversely impacted.
Analysts said that the total contract value may see a slowdown in the next few quarters for some companies and
