Sector Update | 28 March 2019
Momentum intact – Takeaways from Accenture’s commentary
Growth in outsourcing – a positive from Indian IT’s perspective
Appended below are key thoughts on the industry impressed on us following
Accenture’s 2QFY19 results and commentary:
Demand trends holding up well…:
Accenture’s (ACN) revenue growth (+9% YoY
CC v/s 9.5% in 1QFY19) and particularly order bookings in 2QFY19 are indicative
of the sustained demand trends. Consulting order bookings registered book-to-
bill of 1.2 while that for outsourcing deal bookings was 1.1x.
…but potential macro risks may impact ‘run the business’ spend, and not
On the back of the 1HFY19 performance (9% YoY CC, 7.5% organic), the
upper end of the company’s full-year guidance is raised to 8.5% (7% organic).
ACN had been citing the potential for some slowdown in overall economic
growth toward the latter half of 2019. While that has not changed, volatility has
been the new normal for several years. The pace of disruption in client-
industries implies that companies cannot hit the pause button on the new, but
can certainly double down on the cost-rationalization agenda.
Outsourcing growth is a positive:
Outsourcing grew 9% YoY CC, catching up with
Consulting after six quarters. This bodes well for demand, not just in Digital but
also in run-the-business services.
BFSI – set to align with industry:
Accenture had cited its expectation of
improved BFSI growth in 2HFY19. While 2QFY19 growth was 2% YoY CC, the
confidence for that outlook remains intact and is supported by order bookings in
the recent period. India-based peers such TCS and INFO have seen an improved
performance over the past 2-3 quarters, leaving CTSH to recover its growth in
2QFY19 performance highlights
Revenue 2% ahead of consensus
Accenture’s 2QFY19 revenue grew 9% YoY CC to USD10.5b, exceeding the
consensus estimate of USD10.3b by 2% and marginally higher than its guidance
Growth in both
stood at 9% YoY CC.
stood at USD11.8b v/s INR10.3b in the previous quarter.
Consulting new bookings stood at USD6.7b (57% of total bookings).
of 13.3% was in line with consensus.
BFSI soft; traction in growth markets remains strong
BFSI grew 2% YoY CC. Communications, Media & Technology grew 12% YoY CC.
Revenue from North America increased 8% YoY CC, while that from Europe grew
7% YoY CC. Growth markets grew 16% YoY CC, after +17% in 1QFY19.
Ashish Chopra – Research Analyst
(Ashish.Chopra@MotilalOswal.com); +91 22 61291530
Anmol Garg – Research Analyst
(Anmol.Garg@motilaloswal.com); +91 22 6129 1574
28 March 2019
advised to refer through important disclosures made at the last page of the Research Report.
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