IT Stocks: Is worst over for TCS, Wipro, Infosys & others after Accenture's Q4 beat? BofA, Morgan Stanley, HSBC view

Accenture's Q4 results and FY27 guidance suggest decelerating organic revenue growth, signaling a tougher demand environment for Indian IT firms like TCS, Infosys, Wipro, Tech Mahindra, and HCL Tech. Analysts expect similar moderation for Indian IT services, with potential impacts on growth and margins. Accenture's fixed-price and outcome-based work now account for 65% of bookings, reflecting a shift away from effort-based pricing.

India's Nifty IT Index rose 1.6% after Accenture's strong revenue forecast eased AI disruption concerns. Top gainers included Persistent Systems, Mphasis, Wipro, and Tata Consultancy Services. Analysts see AI as a growth opportunity, with the index down 24.5% year-to-date.

Accenture reported $18.7B in Q2 revenue, up 7% YoY, but faces pricing pressure. Jefferies warns of earnings risks for Indian IT firms, while Nuvama sees upside. Nuvama forecasts HCLTech, Infosys, and Tech Mahindra to lead growth, with TCS and Wipro lagging. Accenture's FY27 guidance suggests slower organic growth.

Brokerages predict mid-tier IT firms like Persistent Systems and Coforge will outperform larger peers in Q2FY27, with expected revenue growth of 7% and 4.5% respectively. Larger firms like HCLTech, Infosys, and TCS are projected to see lower growth. Analysts attribute this to mid-tier companies' large deal wins and conversions, while larger firms face pricing pressures and AI-driven productivity gains. Persistent Systems won a $650M deal in June. Margin impacts vary among companies.

Accenture's Q4 results showed 7% revenue growth and strong bookings, boosting its shares and those of Indian IT firms like Infosys and Wipro. Analysts see improved demand for AI-led transformation but caution about pricing pressure and subdued discretionary spending. The Nifty IT index fell 11% in September, with major companies like TCS and Wipro declining significantly.

Accenture shares rose 22% after reporting Q4 revenue of $18.68B, beating expectations. The company forecasted 3-6% revenue growth for fiscal 2027, lifting US-listed Indian IT stocks like Infosys (up 9%) and Wipro (up 10%). Accenture plans $5B in acquisitions, easing AI disruption concerns.