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Accenture 4QFY26: Still cautious despite 4Q beat

* Accenture (ACN) reported 4QFY26 revenue of USD18.7b, up 7% YoY cc, ahead of the top end of its 1–5% guidance range. Management attributed the beat to an uptick in small deals,

*For FY27, ACN has guided for 3–6% YoY cc growth, with an inorganic contribution of ~2–2.5% (implied organic growth guidance of ~0.75–3.75% YoY vs. ~3.5% organic growth in FY26). Management stated that the demand environment, including discretionary spending, did not meaningfully change during the quarter. The top end of the guidance assumes a stable to slightly improving discretionary spend environment, while the bottom end allows for deterioration.

* Read-through for Indian IT: There was no sequential change in the demand environment, with ACN noting that discretionary spending remained broadly unchanged and decision-making continued to be selective. Consulting bookings of USD9.4b translated into a book-to-bill of ~1.0x, in line with the past few quarters. Total bookings of USD22.2b (+5% YoY cc, 1.2x book-to-bill) were driven by record managed services bookings of USD12.8b (1.4x). This indicates that the order book remains skewed toward large, multi-year outsourcing deals. Hence, while the ACN print provides some positive read-through on large-deal activity it does not, in our view, point to a broad-based acceleration in discretionary spending and is unlikely to materially alter our cautious 2QFY27 outlook for Indian IT services.

* As highlighted in our IT preview report dated 1st Oct’26 (Indian IT: Weakness in a seasonal quarter), we believe that 2QFY27 is expected to remain subdued, with limited QoQ growth acceleration across the Indian IT sector amid continued macro uncertainty, cautious discretionary spending, and extended decision-making cycles.

4Q and FY26 revenue beats estimates; FY27 guidance at 3%-6% (inorganic contribution expected at ~2-2.5%)

* Revenue performance: Revenue stood at USD18.7b, up 7% YoY in CC (~5.5% organic YoY CC terms) in 4QFY26, above the guidance range of 1% to 5%. Managed services revenue grew 7% YoY CC, while consulting services grew 7% YoY CC. For Full year 2026, revenue grew 5% YoY CC to USD 74.2b and was above the guidance range of 3% to 4%.

* Bookings in 4Q: ACN reported managed service bookings of USD12.8b, up 2.7% YoY, while consulting bookings were up 6.0% YoY at USD9.4b. The book-to-bill ratio came in at 1.2x in 4QFY26, in line with the average of 1.2x over the past four quarters.

* Revenue guidance: ACN expects 1QFY27 revenue growth in the range of 2% to 6% YoY CC and projects its FY27 revenue growth guidance in the range of 3-6%. With an estimated FY27 inorganic contribution of ~2-2.5%, the organic growth guidance for FY27 stands at ~0.75%-3.75%.

* Vertical-wise performance: Growth was led by Communication, Media, and Technology (11% YoY CC), while Products/ Financial Services /Resources verticals grew 4%/6%/6% YoY CC each.

* Operating margin performance: Reported EBIT margin rose 370bp YoY to 15.3% in 4Q. For FY26, reported EBIT margin stood at 15.4% and expanded 70bp YoY. For FY27, reported EBIT margin is expected to be in the range of 15.9% to 16.1%, marking an expansion of 50bp to 70bp YoY.

* Muted headcount addition: ACN workforce growth increased 2% QoQ to ~814k, attrition decreased to 13% (vs. 14% in 3Q), and utilization stood at 93%.

Key highlights from the management commentary

* Overall demand environment, including discretionary spend, remained largely unchanged in 4Q. Growth was led by large-scale reinventions, ecosystem, and data and AI.

* The Middle East contributes ~USD1b in annualized revenue. Management expects the headwind to persist and has built it into FY27 guidance.

* Revenue from eight emerging AI and data partners more than doubled in FY26, with bookings more than tripling.

* Budget cycles for calendar-year clients are only starting. Management is assuming more of the same for FY27 IT budgets, with clarity by Jan-Feb.

* FY26 bookings were ~USD 84.5b (book-to-bill ~1.1x); trailing four-quarter bookto-bill in managed services was ~1.2x.

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