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MOSL: Morning India (25/June/21): 1. Technology (Accenture’s 3QFY21 result suggests a further acceleration in industry growth); 2. Reliance Industries; 3. Wipro; 4. Financials: Digital Payments Tracker; 5. ONGC

MOrning India (25/June/21):

Today’s top research idea

Technology: Accenture's 3QFY21 result suggests a further acceleration in industry growth

• Accenture (ACN) reported strong 3Q earnings, increasing its FY21 revenue growth guidance by 300bp (midpoint) on better than expected demand environment. ACN's performance and comments reinforce our stance that demand trends, order book, and deal velocity remain robust for the sector. Strong growth and higher book-to-bill ratio in the Outsourcing business (1.2x) resonates well for Indian IT.
• Increased attrition (500bp QoQ) remains a point of concern for the industry as higher employee cost would put pressure on profitability. ACN's 3QFY21 margin improvement (+40bp YoY/+230bp QoQ) lends some comfort in its ability to deploy operating leverage and cost optimization to absorb the higher cost. We maintain our positive stance on the sector as we expect sustained growth rates for a longer period of time. Infosys and HCL Technologies remain our preferred picks within Tier I IT.

Piping hot news

India's bank credit-to-GDP ratio inches up to 56% in 2020, but still way behind peers: BIS data

Notwithstanding incremental credit growth plunging to a 59-year low at 5.56 per cent in FY21, the bank credit-to-GDP ratio rose to a five-year high of a little over 56 per cent in 2020, but way behind its peers and just half of the G20 average, according to the latest data from the Bank for International Settlements (BIS). At 56.075 per cent credit-to-GDP ratio, total outstanding bank credit stood at USD 1.52 trillion in the country in 2020, according to the BIS data for the year, but this is still the second lowest among all its Asian peers. And when it comes to the emerging market peers, it is 135.5 per cent and at 88.7 per cent in advanced economies.