Indian IT stocks fall up to 7% on Accenture guidance
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- Accenture cut its revenue growth guidance for the financial year ending August 2026 to 3-4% from a prior 4-5%, with CEO Julie Sweet disclosing a $90 million miss on revenue consensus and a $100 million impact from the Middle East.
- Infosys shares dropped more than 7% on Friday, Tata Consultancy Services fell over 5%, and Tech Mahindra declined more than 4%, dragging the Nifty IT Index down over 5%.
- Julie Sweet, Accenture's CEO, attributed the results to a $100 million Middle East impact and a $90 million revenue shortfall while discussing the company's third-quarter results on CNBC's Squawk on the Street.
- Citi said it remains cautious on the Indian IT sector, noting the Nifty IT index trades at roughly 16 times one-year forward earnings while Accenture itself trades at 10 times.
- Citi flagged AI disruption, increased competitive intensity, GCC trends, and macro uncertainty as ongoing structural challenges for the Indian IT sector beyond the immediate guidance reaction.
Why it matters: Citi's explicit 16x-versus-10x valuation gap means Indian IT stocks are priced for growth that Accenture's own lowered guidance now undermines. With the Nifty IT Index already sliding over 5% on the news, brokerages are positioned to revisit FY26 estimates for TCS, Infosys, and peers in coming weeks — a re-rating that could compress margins for a sector closely watched as a barometer of global tech spending.
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