Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Union Budget
Budget 2011-2012 Home
Industry Expectations - Budget 2011-2012
Industry Reactions - Budget 2011-2012
Budget 2010-2011
Budget 2010-2011 Home
Industry Expectations - Budget 2010-2011
Industry Reactions - Budget 2010-2011
Contributor's Corner
Bonanza Portfolio
Hemant K Gupta
Krish Bhatt
Trinity Investments
Exchange Information
BSE 2009 Holidays
NSE 2009 Holidays
Investor Guide
Depository & Dematerialisation
Grievance Redressal
Investor Guide
Trading of Securities
Transfer of Securities
Your Rights
Budget 2009-2010
Budget 2009-2010 Home
Industry Expectations - Budget 2009-2010
Industry Reactions - Budget 2009-2010
Interim Budget 2009-2010 Home
Industry Expectations - Interim Budget 2009
Budget 2008-2009
Railway Budget 2008-2009
Industry Expectations - Budget 2008
Union Budget 2008-2009
Highlights of Budget 2008-2009
Summary of Budget 2008-2009
Industry Reactions - Budget 2008
Current IPOs
Past IPOs
IPO Subscription
Mutual Funds
Gold Exchange Traded Fund
MF Unique Holding
Forthcoming Dividends
ELSS Schemes Comparison
Tax Plans
New Fund Offers
Market Whispers
Tax Planning
Equity Linked Savings Scheme
Post Office MIS
9% GOI Senior Citizens Savings Scheme
8% Savings (Taxable) Bonds
Kisan Vikas Patra
National Savings Certificate
Public Provident Fund

| More

Technology: Accenture FY2018 guidance signals no change in demand trend - Kotak

Posted On: 2017-09-29 20:59:46

Accenture has guided 5-8% constant-currency growth for FY2018 (August year-ends), no different from FY2017. FY2018 guidance assumes higher contribution from acquisitions, though. Overall, Accenture guidance indicates status quo on demand environment as compared to FY2017, something which cannot be termed as positive for Indian IT. The silver lining for Indian IT is that demand for Accenture seems to be shifting to applications and operations from strategy and consulting revenues, perhaps an indication of movement in digital demand from consulting to implementation / integration opportunities.

Accenture 4QFY17-strong growth overall; outsourcing business strong

Accenture reported c/c revenue growth of 8% yoy for the August 2017 quarter (Accenture has August financial year-end). Revenue growth was at the upper end of the guidance band. Revenue growth was robust in the products vertical at 10% in c/c, while it was still muted at 4% in health and public services. Financial services and communication, media & technology growth was strong at 9% and 7% respectively. Strong growth in financial services is a surprise noting that Indian IT has indicated lull in spending as the primary reason for a weak FY2018E. New bookings grew 12.2% yoy to US$10.1 bn, of which outsourcing bookings grew at strong 19%. Outsourcing business growth outpaced consulting growth for the third consecutive quarter.

FY2018 revenue growth guidance of 5-8% in c/c similar to beginning of FY2017

Accenture guidance broadly implies no material change in the demand environment compared to FY2017. Moreover, Accenture FY2018 revenue growth guidance builds in 2.5-3% from acquisitions as compared to 2% in FY2017. Indian IT is banking on improvement in demand environment (especially in financial services) to hope for a better FY2019E after disappointments and likely soft growth in FY2018E. Accenture guidance fails to provide that comfort.

NEW (digital, cloud and security services) constitutes more than 50% of revenues

NEW services grew over 30% and contributed 50% to Accenture revenues in FY2017, up from 40% in FY2016 and 30% in FY2015, indicating a rapid transition away from legacy services. Aiding this transition is use of acquisitions; Accenture spent US$1.7 bn on 37 acquisitions in FY2017 (indicating average acquisition size of US$46 mn). The company has allocated US$1.1-1.4 bn to acquisitions in FY2018. Acquisitions are important to beef up skills, ease off time-to-market pressure and accelerate transition of the business model towards digital services. This is an area where Indian IT can pay more attention to.

Silver lining for Indian IT from Accenture commentary

Accenture's FY2017 revenue growth in strategy & consulting services was in low-single digit (flat in 4QFY17) while application services and operations grew in high single and double digits respectively. We note that application services is a large portfolio of business for Indian IT that has seen perceptible slowdown in growth rate with fears of secular decline in this service offering. Accenture management indicated that faster growth, especially in applications, is due to increase in implementation revenues as compared to early stage development cycle prevalent for strategy & consulting work. We would watch this dynamic closely as the strength of Indian IT is in the applications space, an area that has suffered due to reallocation of client spends towards consulting in the past two-three years. Any broader shift in the market towards implementation work can have positive impact on the growth of Indian IT.

Another silver lining is Accenture management commentary wherein it expects better incremental contribution to growth from North America as compared to FY2017. We note that growth from North America was a modest 4% in FY2017 for Accenture.

Per person metrics continue to be under pressure

Revenue/employee (ttm) declined 2.8% yoy to US$86,191, while EBIT/person was down 2% to US$12,720. The decline is steeper at 12% and 9% for revenue/employee and EBIT/employee when compared to the numbers two years ago. The broader trend of shift of operations to low-cost locations and currency headwind is the larger reason over the past two years, but the decline should have been lesser noting-(1) faster growth in consulting and higher realization in digital services and (2) benefits of automation in traditional services.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

AIA Engineering Ltd - SELL - TP Rs.1130 - Result Update - Kotak
Minda Industries (MNDA.IN) - Robust performance - CSEC Research
Karur Vysya bank (KVB IN) - Moderate loan growth, coupled with deteriorating asset quality - CSEC Research
Aksharchem India Ltd - REDUCE - TP Rs.680 - Result Update - Kotak
Voltamp Ltd - BUY - TP Rs.1248 - Result Update - Kotak
Shankara Building Products Ltd - BUY - TP Rs.1654 - Result Update - Kotak
Simplex Infrastructure Ltd - BUY - TP Rs.590 - Result Update - Kotak
MOIL Ltd - ACCUMULATE - TP Rs.265 - Result Update - Kotak
CHHOTA (to) MOTA ideas: Eveready Industries Ltd - BUY - TP Rs.522 - Kotak
Castrol India Ltd - Q2FY18 Result Update - Religare
Minda Corporation - Q2FY18 Result Update - Religare
Mold-Tek Packaging - Q2FY18 Result Update - Religare
The India Cements Ltd - BUY - TP Rs.223 - Result Update - Kotak
Tata Motors - BUY - TP Rs.514 - Result Update - Kotak
Ashok Leyland - ACCUMULATE - TP Rs.126 - Result Update - Kotak
Oil India Ltd - ACCUMULATE - TP Rs.381 - Result Update - Kotak
Sun TV Network - REDUCE - TP Rs.878 - Result Update - Kotak
Larsen & Toubro - ACCUMULATE - TP Rs.1337 - Result Update - Kotak
Voltas - ACCUMULATE - TP Rs.610 - Result Update - Kotak
Allcargo Logistics - BUY - TP Rs.205 - Result Update - Kotak
Mahindra & Mahindra - BUY - TP Rs.1604 - Result Update - Kotak
Motherson Sumi Systems Ltd - SELL - TP Rs.342 - Result Update - Kotak
MRPL - ACCUMULATE - TP Rs.138 - Result Update - Kotak
Mold-Tek Packaging - ACCUMULATE - TP Rs.337 - Result Update - Kotak
NMDC Ltd - REDUCE - TP Rs.130 - Result Update - Kotak
Time Technoplast Ltd - BUY - TP Rs.214 - Result Update - Kotak
Nagarjuna Construction - BUY - TP Rs.107 - Result Update - Kotak
The Phoenix Mills Ltd - BUY - TP Rs.594 - Result Update - Kotak
Sterling Tools Ltd - BUY - TP Rs.350 - Result Update - Kotak
Delhi takes a giant stride towards curbing vehicular pollution: Angel Broking
Mirza International - REDUCE - TP Rs.173 - Result Update - Kotak
Indraprastha Gas - SELL - TP Rs.291 - Result Update - Kotak
Mahanagar Gas Ltd - SELL - TP Rs.1033 - Result Update - Kotak
Petronet LNG - ACCUMULATE - TP Rs.285 - Result Update - Kotak
Bajaj Electricals - SELL - TP Rs.335 - Result Update - Kotak
Chhota (to) Mota Ideas - Venky's India Ltd - BUY - TP Rs.3000 - Result Update - Kotak
Va Tech Wabag - BUY - TP Rs.711 - Result Update - Kotak
Chennai Petroleum Corporation Ltd - ACCUMULATE - TP Rs.485 - Result Update - Kotak
Castrol India Ltd - ACCUMULATE - TP Rs.437 - Result Update - Kotak
Shree Cements Ltd - BUY - TP Rs.21913 - Result Update - Kotak
Greenply Industries Ltd - ACCUMULATE - TP Rs.322 - Result Update - Kotak
IRB Infrastructure Developers Ltd - BUY - TP Rs.271 - Result Update - Kotak
Maharashtra Seamless Ltd - BUY - TP Rs.560 - Result Update - Kotak
VIP Industries - ACCUMULATE - TP Rs.325 - Result Update - Kotak
Greaves Cotton Ltd - ACCUMULATE - TP Rs.136 - Result Update - Kotak
Shipping Corporation of India Ltd - ACCUMULATE - TP Rs.110 - Result Update - Kotak
Berger Paints Ltd - REDUCE - TP Rs.265 - Result Update - Kotak
Apollo Tyres Ltd - BUY - TP Rs.278 - Result Update - Kotak
Zensar Technologies Ltd - REDUCE - TP Rs.855 - Result Update - Kotak
VRL Logistics - BUY - TP Rs.450 - Result Update - Kotak

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2017