IT stocks rally on Accenture's FY22 guidance; Infosys, Wipro at new highs

The Nifty IT index surged over 2 per cent in early trade on Friday as against a 0.48 per cent rise in the benchmark Nifty50 index

Shares of information technology (IT) companies were on roll with most of the frontline stocks trading at fresh all-time highs on the bourses on strong revenue guidance by global IT firm Accenture for the financial year 2021-22 (FY22). Accenture forecasted 12-15 per cent revenue growth for FY22, on top of the $50.5 billion revenue it achieved in the current fiscal.

At 09:32 am; Nifty IT index, the top gainer among sectoral indices, was up 2.2 per cent, as compared to 0.48 per cent risen in the Nifty50 index. The IT index hit a new high of 37,810.75 on the NSE in intra-day trade on Friday.

Larsen & Toubro Infotech, KPIT Technologies, Mphasis, Cyient, Sonata Software, Wipro, Zensar Technologies and L&T Technology Services were up in the range of 3 per cent to 7 per cent. Infosys, Tech Mahindra, HCL Technologies, Tata Elxsi, Mindtree and Persistent Systems were among the 14 stocks from the S&P BSE IT index hitting their respective record highs today.

For FY21, Accenture had reported strong numbers, with outsourcing revenues up 15 per cent while overall revenues (consulting+ outsourcing) grew 11 per cent in constant currency (CC) terms. The company guided for 18-22 per cent CC growth in Q1FY22 and 12-15 per cent CC growth in FY22. It guided for operating margins expansion of 10-30 bps to 15.2-15.4 per cent in FY22. READ MORE

Accenture closed the record $59.3 billion for the full year, a 20 per cent increase in US dollars over full-year fiscal 2020 new bookings, as clients step up investments in technology to transform their business. Accenture, which follows the September to August fiscal year, grew 14 per cent in the year. 

Accenture reported an in line Q4FY21 revenue. The management provided a strong initial guidance on FY22 revenue, with a robust commentary around sustainability of demand. While supply-side pressures are evident, the FY22 margin guidance indicates its ability to offset costs. Its organic revenue growth guidance (7-10 per cent in CC) is strong, given its penchant of raising the guidance over the fiscal. This implies a strong demand momentum for the industry over the next 12 months, Motilal Oswal Securities said in technology sector update.

“We maintain our positive stance on the sector as we expect sustained growth with stable margin. Infosys and HCL Technologies remain our preferred picks within Tier I IT,” the brokerage firm said.