Infosys, TCS, and other IT stocks in focus today after Accenture announces Q1 results

SYNOPSIS: Accenture’s strong Q1 FY26 results lifted Indian IT stocks, highlighting AI-driven demand resilience, though unchanged guidance and mixed broker views suggest steady growth with limited near-term upside amid cautious discretionary spending.

Indian IT stocks such as Infosys, TCS, Tech Mahindra, Wipro, HCL Technologies, and others are in focus on Friday, 19th December, following Accenture’s first-quarter results for FY26 announced late Thursday. The global IT major’s performance set a constructive tone for the sector, with the Nifty IT index gaining up to 1.08 percent to 39,054.35 during early trade.

Accenture Q1 FY26 Performance

Accenture reported a stronger-than-expected first-quarter performance, supported by rising demand for AI-led solutions. The company posted Q1 FY26 revenue of $18.7 billion, reflecting a 6 percent year-on-year increase and coming in at the upper end of its guidance.

Growth was broad-based across geographies. Revenue from the Americas increased 4 percent to $9.08 billion, while EMEA rose 8 percent to $6.94 billion and Asia Pacific grew 7 percent to $2.73 billion, indicating resilient demand despite an uneven global macro environment. Gross margin improved marginally to 33.1 percent, compared with 32.9 percent in the year-ago period.

The company reported new bookings worth $20.9 billion, representing a 12 percent increase in U.S. dollar terms and 10 percent growth in local currency. Advanced AI-related deals accounted for $2.2 billion of total bookings.

On the profitability front, GAAP operating margin declined to 15.3 percent, down 140 basis points YoY. However, adjusted operating margin improved by 30 basis points to 17.0 percent, reflecting operational efficiencies. GAAP diluted EPS came in at $3.54, slightly lower than last year’s $3.59, while adjusted EPS rose 10 percent to $3.94.

Accenture generated free cash flow of $1.5 billion during the quarter and returned $3.3 billion to shareholders. This included $2.3 billion through share repurchases, involving the redemption of 9.5 million shares, and $1.0 billion in dividends, translating to $1.63 per share, a 10 percent increase YoY.

FY26 Outlook Remains Unchanged

Despite the strong quarterly performance, Accenture kept its full-year FY26 revenue growth guidance unchanged. The company continues to expect 2-5 percent growth in local currency terms. Excluding an estimated 1 percent impact from its U.S. federal business, revenue growth is projected at 3-6 percent in local currency.

The company now expects GAAP operating margin to range from 15.2-15.4 percent, implying an expansion of 50-70 basis points, while adjusted operating margin is guided at 15.7 to 15.9 percent, reflecting a 10-30 basis point improvement.

Accenture also revised its full-year GAAP diluted EPS guidance to $13.12-$13.50, indicating an 8-11 percent increase, while adjusted EPS is expected in the range of $13.52-$13.90, representing 5-8 percent growth.

Management reiterated that discretionary spending trends remain unchanged, with overall client spending largely stable compared to last year and no immediate macro tailwinds visible. At the same time, GenAI continued to gain momentum, contributing 11 percent of new bookings and 6 percent of total revenue. Advanced AI bookings surged 76 percent year-on-year, while advanced AI revenue more than doubled to $1.1 billion, crossing the billion-dollar mark for the first time.

Given the widespread integration of AI across client engagements, Accenture announced that it will no longer report AI as a standalone metric, as these capabilities are now embedded across nearly all service offerings.

What does this signal for the Indian IT sector?

JM Financial noted that Accenture’s management commentary points to stable client priorities, with large-scale digital transformation programs continuing largely uninterrupted, even as discretionary spending remains broadly flat compared with last year. According to the brokerage, the sizeable opportunity around digital core modernisation, followed by industry-specific solutions and ongoing optimisation through managed services, continues to provide a long and visible growth runway for Indian IT companies.

The brokerage further highlighted that the acceleration in managed services revenue, along with signs of improving pricing, is a positive development for Indian IT peers. JM Financial added that any revival in discretionary spending could act as an additional growth lever. Overall, it remains constructive on the sector, stating that the risk-reward equation is still favourable. However, it cautioned that the nearly 9 percent rally in Indian IT stocks over the past two months suggests that a portion of the optimism may already be reflected in valuations, raising the bar for near-term execution.

In contrast, Jefferies struck a more cautious note, flagging potential downside risks after Accenture guided for organic revenue growth of 1.5-4.5 percent in FY26. The brokerage interpreted Accenture’s “steady-to-moderating” outlook as a sign that discretionary spending remains constrained, despite increasing traction in GenAI-led projects.

Jefferies also pointed out that Accenture retained its 2-5 percent year-on-year revenue growth guidance even after a strong first quarter, which it sees as an indication of lingering demand uncertainty. Historically, the brokerage noted, the absence of an upward guidance revision after Q1 has often been followed by subsequent downgrades. As a result, Jefferies expects limited valuation expansion for Indian IT companies and reiterated its selective approach toward the sector.

Written by Shivani Singh

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