Accenture Q3: Why Infosys, HCL, TCS, Wipro shares are falling today; top stock picks

IT stocks including Infosys Ltd, HCL Technologies Ltd, Tata Consultancy Services Ltd (TCS) and Wipro Ltd led the largecap losers on Monday morning after Accenture's Q3 results. Though Accenture delivered revenue higher than its guided range of $16.9–17.5 billion, the results were overshadowed by slightly lower outsourcing growth; slower overall deal wins; and excessive headcount reduction, indicating lower demand going forward. 

ICICI Securities said the soft outsourcing deal wins is a dampening readthrough for Indian IT plays, adding that Accenture tightened its guidance to 6–7 per cent with no revision to the upper-end through FY25. 

"Though ACN, along with other IT companies, has indicated that there is an increasing non-linearity between headcount addition and revenue growth, when combined with slowing deal wins, it portends sluggish recovery in the demand environment and lower discretionary spends. AI, BFSI and healthcare will likely be the high-traction demand areas," it said.

Antique Stock Broking said Accenture's commentary suggests that its clients are still cautious about discretionary spending, particularly for short-term consulting projects. 

"Despite of which it is seeing strong demand for larger, more strategic transformation programs that promise long-term results. Cloud and data continue to be at the core of most transformation programs. However, some cloud programs are experiencing a delay in decisions, though large-scale modernizations are still progressing," this brokerage said.

Nomura India said it expects the growth momentum in the financial services vertical to continue in the near term for Indian IT services companies. There has been no meaningful deterioration of the demand environment since the 90-day pause on tariff imposition by the US administration in early April, it said.

"However, a sharp growth revival hinges on macroeconomic improvement particularly in the US.
We prefer Infosys and Cognizant (not listed in India) in large-caps (both Buy-rated); and Coforge (Buy) in mid-caps," it said.

The NIFTY IT Index has underperformed the broader markets by 16.6 percent in the last six months, owing to cautious spending behavior by clients amid elevated macro uncertainties and downgrade in earnings. 

However, it has partially recovered in the past one month, up 4.6 per cent, and outperforming broader markets by 3.5 per cent on the back of no further deterioration in the demand environment, hope of interest rate-cut in the US, and the earnings downgrade cycle bottoming out, Emkay Global said adding that its pecking order is Infosys, TCS, HCL Tech, Tech Mahindra, LTIMindtree, and Wipro in large caps.

JM Financial said while no incremental deterioration is positive, 8 per cent run-up in Nifty IT index in 2025 so far has likely priced that in already. 

"We therefore remain selective. TCS/Inofsys among large-caps, Mphasis among mid-caps and Sagility among BPOs offer better risk-reward at current levels," it said.