Shares of IT companies were on roll on Friday after Accenture reported robust Q4FY21 results. The Nifty IT index rose almost 3 per cent to hit a new high of 37,810.75 and all the stocks of the index hit their fresh 52-week highs. The S&P BSE IT index also hit an all-time high of 36,619.39.
Shares of Infosys, HCL Tech, Wipro, Tech Mahindra, Coforge, L&T Infotech, Mindtree and Mphasis were up in the range of 1 per cent to 4 per cent. NIIT Limited and Aptech Limited were the top performers on BSE.
The Indian rupee depreciated 13 paise to 73.77 against the US dollar in opening trade on Friday. Rupee's weakness also supported the rally as it is considered positive for IT companies.
"Accenture reported strong Q4FY21 results, beating the street expectations on all financial and operational terms. Revenue for the quarter stood at $13.4 billion, registering a growth of 24 per cent YoY. GAAP EPS for Q4FY21 stood at $2.23 and adjusted EPS stood at $2.03 vs $1.84 YoY. The company bagged new bookings at the record-high of $15 billion, up 7 per cent YoY, while total booking for FY21 stood at $59.8 billion, up 20 per cent YoY. New bookings were largely broad-based in terms of verticals and geographies and the management believes that the company would continue to witness strong growth momentum in FY22 as well," noted Axis Securities.
The brokerage house added that the management provided revenue guidance of 12-15 per cent growth in for FY22 which stands as one of the highest starting guidance in recent history.
"We believe strong investments in Digital Technologies, Cloud Transformation, IoT, As-a-Service, and Machine learning across verticals will accelerate the companies' revenue growth. The macroeconomic tailwinds will also help in garnering larger deals. On a vertical front, the BFSI vertical witnessed strong traction in the cloud transformation and is likely to showcase the fastest recovery after COVID-19 outbreak," it added.
"NIFTY IT is currently trading at a staggering 82 per cent premium vs long-term averages (+35 per cent in case of NIFTY) led by (1) expectations of structurally higher growth post covid, and (2) street's preference for 'relative' near-term predictability on the back of second wave impact on domestic sectors," said ICICI Securities.
"Global tech stocks like Facebook, Alphabet etc., the primary beneficiaries of digital adoption are now way cheaper (22-23x, 1-yr forward PE) than NIFTY IT (~32x) despite consensus expecting significantly higher growth rates for the former. We remain cautious as the steady-state growth rates unfolding do not seem to justify the magnitude of re-rating," added the brokerage house.
"The management commentary reinforces our view that the demand environment continues to remain strong and is sustainable. Solid and conservative guidance for FY22 and strong headcount addition provides visibility to India's IT growth momentum," noted Motilal Oswal.
"While supply-side challenges remain a point of concern, Accenture's margin guidance implies margin strength will continue in FY22. We maintain our positive stance on the sector as we expect sustained growth with a stable margin. Infosys and HCL Technologies remain our preferred picks within Tier I IT," added the brokerage house.
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