Accenture Plc’s latest results strengthen the Street’s view of a recovery in the IT sector. The global IT major reported a 1% fall in constant current revenues in the quarter ending August 2020. But outsourcing revenue, where the Indian IT has greater presence, held-up growing 7% from the year-ago quarter. In the earlier quarter (Q3 FY20) outsourcing revenue grew 5%. The Nifty IT index is up 2% in Friday trade. Note that Accenture’s fiscal year ends in August.
The company saw strong orders. New bookings at $14 billion are up 9%. The orders are driven by outsourcing. Orders in the outsourcing segment grew 10% to $7.5 billion, the highest in recent quarters. In Q3, outsourcing orders grew 4%. “Sustained healthy momentum in outsourcing business revenue and booking augurs well for Indian peers," Emkay Global Financial Services Ltd said in a note.
The book-to-bill ratio is at 1.3 times, the highest in 25 quarters, points out Jefferies India Pvt. Ltd. Book-to-bill is a ratio of new orders to completed sales. A ratio above one implies strong demand.
“We understand these bookings could be lumpy, but they still indicate demand is on the path to normalization/recovery, with the worst behind us. Management hinted at a robust deal pipeline, which is encouraging for Indian IT companies as well," Motilal Oswal Financial Services Ltd said in a note.
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