Accenture’s fourth-quarter earnings have set the stage for India’s IT sector, with Nomura and Morgan Stanley offering contrasting perspectives on the road ahead.

The Ireland-based tech firm’s results came in largely in line with expectations. Compared to a revenue growth forecast of 1.5%-2.5% for FY24, the company hiked its revenue growth outlook to 3%-6% in FY25.

What Happened: Nomura remains upbeat on large-cap Indian IT companies, reaffirming its “buy” recommendations for Infosys, Wipro and Cognizant Technology and identifying growth opportunities in mid-cap player eClerx Services.

Nomura’s confidence is driven by Accenture's revenue growth outlook of 3%-6% for FY25, which is supported by substantial order bookings and the increasing role of generative artificial intelligence (AI) in business operations.

However, Nomura also warned of a potential slowdown in growth, forecasting that the bottom could be reached in FY25. As a result, the brokerage issued “reduce” ratings for companies such as LTIMindtree, Mphasis and L&T Technology Services.

While the rise of generative AI and strong project wins provide reasons for optimism, hurdles remain, according to the brokerage.

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Contrasting Stance: On the other hand, Morgan Stanley presented a more cautious view. Although Accenture’s FY25 guidance points to gradual improvements in organic growth over the next year, Morgan Stanley doesn’t expect any significant shifts in the macroeconomic landscape in the near term.

The brokerage firm described Accenture's Q4 results as neutral to slightly positive for Indian IT companies. While the growth was modest, it provided some relief for the sector, indicating that Indian IT firms may experience a gradual recovery.

Price Action: Most Nifty stocks were in the black on Friday. Infosys, Wipro and TCS were up 3.09%, 2.43% and 1.69%, respectively, in morning trade.

LTI Mindtree gained 2.69% while Mphasis and L&T Technology shot up 2.57% and 1.98%, respectively.

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