Birlasoft Q1 Results Review - Well Poised For Growth: IDBI Capital

IDBI Capital Report

Birlasoft Ltd. reported 1.7% QoQ growth excluding on off from invacare. This growth is still good considering macro uncertainty. It is taking the right step to turnaround the business like focus on delivery, clients, investment in sales and hiring of leaders to drive vertical growth.

We expect the company to register QoQ growth in coming quarters led by banking, financial services and insurance, bottoming of enterprise resource planning business and healthy H2 FY24E.

However, we have conservatively assumed 6% YoY growth in revenues due to macro uncertainty and Invacare base.

Birlasoft aims to achieve 16% exit margins by Q4 FY24E.

Considering Q1 performance led by gross margin expansion we have revised our margin estimates upwards leading to earnings per share revision of 6.7% & 4.4% for FY24E and FY25E.

Hence, we maintain our 'Buy' rating on the stock with a target price of Rs 475 (20 times FY25E earnings per share).

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