Accenture maintains organic growth guidance, ICICI Securities

Even though Accenture Plc has cut the top-end of its FY23 (August-ending) revenue growth guidance to 8-10% from 8-11% earlier, the mid-point of its organic growth guidance of 6-8% is same as that of earlier guidance of 5.5%-8.5%.

Accenture reported healthy revenue growth of 9% YoY constant currency in Q2 FY23, near the upper end of its guidance of 6-10%. Revenue of $15.81 billion during the quarter was also 2% higher than Bloomberg consensus estimate of $15.55 billion.

Ebit margin declined 140 basis points YoY to 12.3% due to structural cost optimisation programmes undertaken by Accenture. Adjusted margin stood at 13.8%, up 10 bps YoY.

Key positives from results:

• Overall bookings at $22.09 billion (up 17% YoY CC) were Accenture’s highest-ever. Bookings were strong for both outsourcing and consulting with book-to-bill ratio of 1.5 times and 1.3 times respectively.
• Outsourcing revenue grew at a strong pace of 16% YoY. Strong growth in outsourcing bookings at $11.43 billion, up 31% YoY, and strong outsourcing revenue indicates strong read across for Indian IT companies, which are largely dependent on outsourcing.

Key negatives from results:

• Q3 FY23 revenue growth guidance of $16.1 billion-16.7 billion, i.e. up 3-7% YoY CC, is lower compared to the 9% YoY CC in Q1 FY23.
• Mid-point of the guidance – $16.4 billion – is lower than consensus expectations of $16.6 billion. Having said this, mid-point of the guidance assumes 4% QoQ growth in U.S. dollar terms, which is healthy in our view, given the weak macroenvironment.

Bloomberg