On Friday, June 21, IT stocks like TCS and Infosys are expected to be in the spotlight following the financial results of global IT giant Accenture for their May quarter.
Accenture reported revenues of $16.5 billion for the quarter, a 1% decrease in US dollars but a 1.4% increase in local currency. For the fourth quarter of fiscal 2024, Accenture expects revenues between $16.05 billion and $16.65 billion, representing a 2% to 6% growth in local currency. This forecast includes an expected negative 2% impact from foreign exchange compared to the same quarter last year.
Accenture’s performance is often seen as an indicator for Indian IT companies, and their results are closely watched by IT sector experts and investors. This reflects the global demand for IT services.
The Indian IT sector has faced pressure over the past two years following a boost during the Covid-19 pandemic. The Nifty IT index has risen about 30% in the last two years, compared to a 54% increase in the Nifty 50 index. However, in the past year, the performance gap has narrowed. Nifty IT is up 21%, while Nifty 50 is up 25%.
Some IT stocks have seen significant gains since last year. Persistent Systems has risen by 57%, Mphasis by 29%, Wipro by 28%, Tech Mahindra by 26%, HCL Tech by 24%, and L&T Tech by 23%. However, TCS and Coforge are both up by 17%, Infosys by 16%, and LTIMindtree by only 0.6%, all underperforming the IT index.
“We remain cautious about the IT sector. We believe demand will be slow for a while, and current estimates are more likely to be lowered than raised,” said Nirmal Bang Institutional Research.
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