The recent earnings report from Accenture has cast a shadow over several prominent Indian IT companies, leading to a notable decline in their stock prices. Infosys, Wipro, and Tata Consultancy Services (TCS) experienced drops of up to 3% following Accenture’s second-quarter results for February 2025. This downturn reflects broader market trends and investor sentiment, as concerns about growth loom large.

Stock Reactions to Accenture’s Earnings

On the Bombay Stock Exchange (BSE), the share price of Infosys fell 3.09%, settling at ₹1,564.15. Similarly, TCS saw a decline of 2.7%, closing at ₹3,466.60, while Wipro shares dipped 2.85% to ₹260.30. HCL Technologies also faced a decrease of 2.53%, with shares priced at ₹1,521.20.

• Infosys ADR dropped 3.5% to $17.9 on the New York Stock Exchange (NYSE).
• Wipro ADR fell 3.2% to $2.79.

The tech-heavy Nasdaq Composite in the U.S. ended on a lower note, down 59.16 points or 0.33%, closing at 17,691.63.

Accenture’s Performance Overview

Accenture’s earnings report for the second quarter highlighted a 5% year-over-year revenue increase, reaching $16.7 billion. This figure aligns with the company’s guidance, which was between $16.2 billion and $16.8 billion. Notably, Accenture has revised its full-year revenue growth outlook to 5-7% in local currency, slightly up from the previous estimate of 4-7%.

• For the upcoming third quarter, Accenture anticipates revenues between $16.9 billion and $17.5 billion.
• The company reported a gross margin of 29.9%, compared to 30.9% in the same quarter last year.

Despite these positive figures, total new bookings were slightly below expectations at $20.9 billion, with consulting and managed services bookings at $10.5 billion and $10.4 billion, respectively. This slight dip in deal bookings raises questions about sustained growth amid ongoing market uncertainties.

Implications for Indian IT Firms

The ripple effects of Accenture’s earnings report are felt deeply within the Indian IT sector. According to Avinash Gorakshkar, Head of Research at Profitmart Securities, approximately 50% of Indian IT companies’ U.S. revenue is linked to Accenture. Weak guidance from Accenture has created a bearish outlook for firms like Infosys and Wipro, leading to anticipated selling pressure on their stocks.

• Analysts at Antique Stock Broking expressed concerns over federal spending uncertainties, which could keep stock prices volatile.
• The risk of clients halting spending due to rising global uncertainties is another challenging factor for Indian IT firms.

Looking Ahead

Despite the current challenges, there are glimmers of hope. The growth in Managed Services and bookings could provide some relief from the macroeconomic pressures facing the sector. Analysts suggest that companies like HCL Technologies, Coforge, Mphasis, and Cyient are well-positioned to navigate these turbulent times.

Dipeshkumar Mehta, a Senior Research Analyst at Emkay Global Financial Services, warns that ongoing macro uncertainties may jeopardize the growth forecasts for Indian IT companies. The Nifty IT Index has already corrected by approximately 15% this calendar year, underperforming the broader market by around 13%.

• The consensus is that while growth moderation has been priced into valuations, risks of a significant slowdown or recession remain.

In summary, while Indian IT stocks are currently facing headwinds, careful navigation of these market dynamics and a focus on growth in managed services could help stabilize their outlook in the coming months.