Birlasoft Q4 Results Review - Green Shoots In Turnaround: IDBI Capital

IDBI Capital Report

Birlasoft Ltd. reported 3% constant currency growth in dollar revenues (excluding Invacare), better than peers. 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 6.5% YoY growth in revenues due to macro uncertainty, project run offs and Invacare base.

Birlasoft also aspires to reach 15-16% Ebitda margins in coming quarters. We have built in a 14.5% Ebitda margins for FY24E.

We have kept our estimates unchanged. However, we have revised our multiple upwards to 15 times (from 14 times) to factor in green shoots in turnaround.

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