Explained: Accenture Q4 beats estimates, but Indian IT outlook stays tepid

Accenture Q4FY25 results near top of guidance, but analysts remain cautious on Indian IT stocks amid macro uncertainty, weak discretionary spending, and H-1B risks

Accenture’s cautious management commentary during its result for the June-August quarter has left Dalal Street analysts concerned about Indian information technology (IT) stocks in the near term. 

On September 25, the global consultancy firm, which houses a significant portion of the Indian IT workforce, guided for revenue gro­wth of 2-5 per cent for FY26, with 1-1.5 per cent headwind from the US Federal business and 1.5 per cent inorganic contribution. 

Accenture follows the September-August financial year. For Q1FY26, the management projected 1-5 per cent year-on-year (Y-o-Y) revenue gro­wth in constant currency (CC) ter­ms. It expects FY26 adjusted operating margin to come at 15.7-15.9 per cent. 

 

According to analysts at Emkay Global Financial Services, Accenture's FY26 guidance does not assume any improvement in discretionary spends at the upper end. “In fact, it assumes further deterioration at the lower end,” it said. 

The conservative approach of the Dublin-headquartered IT firm paints a concerning picture for the Indian IT sector, which has been marred by increased risks of protectionist measures, such as the H-1B visa fee increase, and cautious spending behaviour by clients amid elevated macro uncertainties, the analysts said. 

The Nifty IT index settled near day’s low on Friday, dropping 2.45 per cent to 33,702 on the National Stock Exchange (NSE), as against a 0.95 per cent slide in the Nifty50. 

All 10 index constituents nursed losses, with Oracle Financial Services Software (OFSS), LTIMindtree, Coforge, Persistent Systems, Tech Mahindra, and Mphasis sliding between 2.5-4 per cent. 

“While Accenture’s Q4 numbers beat estimates, the commentary around demand remained stubbornly non-committal — the upper end assumes zero recovery in macros, whereas the lower end allows for further deterioration. In Indian context, IT services’ revenue and commentary could mirror the stasis seen in Accenture, with Q2FY26 earnings to largely be muted,” Motilal Oswal Financial Services said. 

Accenture Q4 results 

Accenture posted a revenue growth of 7.3 per cent Y-o-Y to $17.6 billion in Q4FY25. This was a 4.5 per cent Y-o-Y rise in CC terms and was near the top end of its guided range. Segment-wise, consulting revenue grew 6 per cent Y-o-Y to $8.8 billion (up 3 per cent CC Y-o-Y), while managed services revenue rose 8 per cent Y-o-Y to $8.8 billion (up 6 per cent CC Y-o-Y). Further, financial services (up 12 per cent CC Y-o-Y) led revenue growth within industries. Accenture recorded a 6-per cent Y-o-Y growth in new bookings. Its book-to-bill ratio, which compares the value of new orders booked to the value of services shipped, was ₹1.2 times in Q4FY25. 

The firm also clocked $1.8 billion deal wins in GenAI in Q4FY25 (against $1.5 billion in Q3). GenAI revenue was $0.9 billion in Q4FY25 and $2.7 billion in FY25. In India, GenAI bookings rose from $3.0 billion in FY24 to $5.9 billion in FY25. 

Bet for long term 

That said, analysts expect the sector to witness a turnaround in the long term, provided there are visible signs of macroeconomic stability, particularly in the US. 

For Nuvama Institutional Equ­ities, Accenture’s revenue growth — driven by managed services (outsourcing) in Q4 — presents opportunities for Indian IT companies. 

“While we view the results as neutral for Indian IT, given the near-term volatility, impacted by weak and uncertain macro, we remain positive over the medium-to-long term, anticipating a recovery in the macro environment,” it said. 

Emkay Global picked Infosys, TCS, LTIMindtree, Wipro, HCLTech, and Tech Mahindra as top long-term bets. While, Nomura backed Infosys, Coforge, and Firstsource on hopes of a steady growth momentum in the financial services vertical for the sector.