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● Accenture reported its Aug 2011 quarter results on 27 Sept.
Revenue growth of 14% YoY (constant currency) was 2% ahead
of consensus estimates. FY8/12 revenue growth guidance of 7-
10% in CC terms was unchanged and ahead of consensus
estimates. The stock closed up 3% during regular trading and 4%
in extended trading. Quarterly order bookings of $8.4 bn were an
all-time high for the company.
● Management commented that clients are well aware of the
external environment but see strong activity and investments in
new and maintenance projects that take out costs.
● Financial services business grew 13% YoY in CC terms in the
Aug-11 quarter, nearly in line with the overall 14% growth. They
continue to be cautious about their consulting business in
European financial services. Overall, there has been no indication
of increased scrutiny in spending by clients.
● While the environment continues to be uncertain, these results
present yet another datapoint that demand trends for IT services
remain solid. Reiterate OVERWEIGHT.
Robust top-line growth
4Q revenues increased 23% YoY in USD terms, 14% YoY in constant
currency to US$6.7 bn compared to consensus estimates of US$6.5
bn and guidance of US$6.4 to US$6.6 bn.
Consulting revenues, which are more relevant for Indian IT services
companies grew 16% YoY in CC terms. Outsourcing grew 13% YoY.
Financial services growth nearly in line with total, Europe
continues to be relatively weak
EMEA region continued to be the slowest growing geography in the
company. Management indicated that it had some concern with
respect to ongoing macro-economic concerns, especially with respect
to consulting business in the European financial services space.
However, it mentioned that there was significant disparity with respect
to demand environment in different European countries. While south
European countries were struggling, Germany and the Nordic
countries were doing well. We note that Indian IT services companies
have little exposure in southern Europe.
Financial services business grew nearly in line with other businesses
for Accenture.
Guidance ahead of street expectations
FY8/12 revenue growth guidance of 7-10% in CC terms was
unchanged. This is ahead of street expectations.
Strong order book
Quarterly order bookings of US$8.4 bn were an all-time high for the
company. For the full year ending Aug-12, management has guided to
order bookings of US$28 bn to US$31 bn.
Macro worrying, but no impact so far
While Accenture management recognised recent global macro risks
have increased and global growth has slowed, it had not seen any
impact on IT spending so far. Management stated that there has been
no indication of project delays or increased scrutiny in spending.
Accenture reported that its clients were highly focussed on cost
management in the macro climate and that clients had much stronger
balance sheets currently than at the time of the previous crisis and
continued to invest.
We reiterate our positive view on Indian IT companies
While clearly the global environment is uncertain, strong results from
firms such as Accenture and Oracle, results of corporate surveys in
US and Europe and positive datapoints from Indian IT companies give
us a high degree of confidence for 15-20% near-term revenue growth
potential. Europe and financial services remain areas to monitor
closely. If a recession were to occur, growth will definitely be a lot
lower and valuations will fall but our argument has been then this
segment may still be a relatively safe place to be in.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● Accenture reported its Aug 2011 quarter results on 27 Sept.
Revenue growth of 14% YoY (constant currency) was 2% ahead
of consensus estimates. FY8/12 revenue growth guidance of 7-
10% in CC terms was unchanged and ahead of consensus
estimates. The stock closed up 3% during regular trading and 4%
in extended trading. Quarterly order bookings of $8.4 bn were an
all-time high for the company.
● Management commented that clients are well aware of the
external environment but see strong activity and investments in
new and maintenance projects that take out costs.
● Financial services business grew 13% YoY in CC terms in the
Aug-11 quarter, nearly in line with the overall 14% growth. They
continue to be cautious about their consulting business in
European financial services. Overall, there has been no indication
of increased scrutiny in spending by clients.
● While the environment continues to be uncertain, these results
present yet another datapoint that demand trends for IT services
remain solid. Reiterate OVERWEIGHT.
Robust top-line growth
4Q revenues increased 23% YoY in USD terms, 14% YoY in constant
currency to US$6.7 bn compared to consensus estimates of US$6.5
bn and guidance of US$6.4 to US$6.6 bn.
Consulting revenues, which are more relevant for Indian IT services
companies grew 16% YoY in CC terms. Outsourcing grew 13% YoY.
Financial services growth nearly in line with total, Europe
continues to be relatively weak
EMEA region continued to be the slowest growing geography in the
company. Management indicated that it had some concern with
respect to ongoing macro-economic concerns, especially with respect
to consulting business in the European financial services space.
However, it mentioned that there was significant disparity with respect
to demand environment in different European countries. While south
European countries were struggling, Germany and the Nordic
countries were doing well. We note that Indian IT services companies
have little exposure in southern Europe.
Financial services business grew nearly in line with other businesses
for Accenture.
Guidance ahead of street expectations
FY8/12 revenue growth guidance of 7-10% in CC terms was
unchanged. This is ahead of street expectations.
Strong order book
Quarterly order bookings of US$8.4 bn were an all-time high for the
company. For the full year ending Aug-12, management has guided to
order bookings of US$28 bn to US$31 bn.
Macro worrying, but no impact so far
While Accenture management recognised recent global macro risks
have increased and global growth has slowed, it had not seen any
impact on IT spending so far. Management stated that there has been
no indication of project delays or increased scrutiny in spending.
Accenture reported that its clients were highly focussed on cost
management in the macro climate and that clients had much stronger
balance sheets currently than at the time of the previous crisis and
continued to invest.
We reiterate our positive view on Indian IT companies
While clearly the global environment is uncertain, strong results from
firms such as Accenture and Oracle, results of corporate surveys in
US and Europe and positive datapoints from Indian IT companies give
us a high degree of confidence for 15-20% near-term revenue growth
potential. Europe and financial services remain areas to monitor
closely. If a recession were to occur, growth will definitely be a lot
lower and valuations will fall but our argument has been then this
segment may still be a relatively safe place to be in.
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