Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Accenture (covered by our US IT analyst Tien-Tsin Huang) reported a robust
Q3 meaningfully ahead of consensus and J.P. Morgan (revenue) estimates,
pointing to continued healthy spending environment. The company reported
impressive revenue growth and bookings for both consulting and outsourcing
businesses. Management suggested that discretionary spending continues to
grow and macro economic concerns do not seem to have impacted clients’
willingness/ability to invest for future growth. Public sector revenues were light,
which is understandable given difficult fiscal situation (in the US and certain
European countries); however it is not likely to impact overall revenue growth
meaningfully. Management pointed out that clients continue to spend to
position themselves for global opportunities, to be compliant with new
regulations, to increase efficiency to remain competitive and to build
capabilities in themes like cloud, analytics and mobility.
Strong revenue growth and bookings point to healthy demand
environment. Accenture reported impressive Q3 revenues of $6.7 bn,
significantly ahead of consensus estimate of $6.4 bn and upper end of guidance
($6.5 bn). Consulting revenues were particularly robust (growing 17% y/y in
local currency and 23% y/y in USD) pointing to strong discretionary spending,
while Outsourcing business was healthy with 12% y/y revenue growth in local
currency (17% in USD). Bookings were strong (particularly for outsourcing) at
$7.1 bn, and positively, the company guided for even stronger booking (about
$8 bn) next quarter (management is likely to have significant visibility for next
quarter bookings now). Notably, BFSI growth (which had some concerns
regarding sustainability of growth) was impressive (19% in local currency) as
acquisition integration and compliance projects continue to grow, this bodes
well for TCS & Cognizant, which derive over 40% of their revenues from BFSI.
This also helps assuage concerns that BFSI spending might be slowing down.
Discretionary spending continues to grow. Management suggested that
system integration work exhibited strong growth driven by ERP for helping
global expansion and for data management and analytics. The driving factors for
consulting growth include intent to target new opportunities, revenue growth
and rationalization of infrastructure utilizing virtualization and consolidation.
Globalization, increased regulation, efficiency focus and themes are driving
spending growth despite weak macro environment. Weakening consumer
spending (particularly in the US) and macroeconomic concerns do not seem to
have impacted enterprise spending, which drives IT industry revenues. Most
clients of IT services vendors are G2000 companies, which continue to invest in
new markets/geographies, need to be compliant with new regulations, invest for
operational efficiency to remain competitive and in themes such as cloud,
mobility and analytics. Moreover, these companies have meaningful exposure to
emerging markets where growth has not meaningfully slowed down.
Accenture results point to strong growth for Indian IT companies. We
believe the healthy spending environment augurs well for revenue growth for
Indian IT. We retain our positive bias towards the sector with OW on TCS,
Wipro and HCL Technologies.
Visit http://indiaer.blogspot.com/ for complete details �� ��
Accenture (covered by our US IT analyst Tien-Tsin Huang) reported a robust
Q3 meaningfully ahead of consensus and J.P. Morgan (revenue) estimates,
pointing to continued healthy spending environment. The company reported
impressive revenue growth and bookings for both consulting and outsourcing
businesses. Management suggested that discretionary spending continues to
grow and macro economic concerns do not seem to have impacted clients’
willingness/ability to invest for future growth. Public sector revenues were light,
which is understandable given difficult fiscal situation (in the US and certain
European countries); however it is not likely to impact overall revenue growth
meaningfully. Management pointed out that clients continue to spend to
position themselves for global opportunities, to be compliant with new
regulations, to increase efficiency to remain competitive and to build
capabilities in themes like cloud, analytics and mobility.
Strong revenue growth and bookings point to healthy demand
environment. Accenture reported impressive Q3 revenues of $6.7 bn,
significantly ahead of consensus estimate of $6.4 bn and upper end of guidance
($6.5 bn). Consulting revenues were particularly robust (growing 17% y/y in
local currency and 23% y/y in USD) pointing to strong discretionary spending,
while Outsourcing business was healthy with 12% y/y revenue growth in local
currency (17% in USD). Bookings were strong (particularly for outsourcing) at
$7.1 bn, and positively, the company guided for even stronger booking (about
$8 bn) next quarter (management is likely to have significant visibility for next
quarter bookings now). Notably, BFSI growth (which had some concerns
regarding sustainability of growth) was impressive (19% in local currency) as
acquisition integration and compliance projects continue to grow, this bodes
well for TCS & Cognizant, which derive over 40% of their revenues from BFSI.
This also helps assuage concerns that BFSI spending might be slowing down.
Discretionary spending continues to grow. Management suggested that
system integration work exhibited strong growth driven by ERP for helping
global expansion and for data management and analytics. The driving factors for
consulting growth include intent to target new opportunities, revenue growth
and rationalization of infrastructure utilizing virtualization and consolidation.
Globalization, increased regulation, efficiency focus and themes are driving
spending growth despite weak macro environment. Weakening consumer
spending (particularly in the US) and macroeconomic concerns do not seem to
have impacted enterprise spending, which drives IT industry revenues. Most
clients of IT services vendors are G2000 companies, which continue to invest in
new markets/geographies, need to be compliant with new regulations, invest for
operational efficiency to remain competitive and in themes such as cloud,
mobility and analytics. Moreover, these companies have meaningful exposure to
emerging markets where growth has not meaningfully slowed down.
Accenture results point to strong growth for Indian IT companies. We
believe the healthy spending environment augurs well for revenue growth for
Indian IT. We retain our positive bias towards the sector with OW on TCS,
Wipro and HCL Technologies.