'Hold' Birlasoft Shares, Maintains IDBI Capital Post Soft Q1 Results — Check New Target Price

Birlasoft won 'marquee deals' in generative AI, including a partnership with a leading US energy firm and a quality engineering transformation program for a global tech leader. Management's near-term focus is on sequential growth, building a robust pipeline, and maintaining margin stability.The report notes that the company's core banking is not a focus area.

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IDBI Capital Report

Birlasoft Ltd. reported a 1% QoQ revenue decline in Q1 to $150.7 million, driven by macroeconomic headwinds, client insourcing, and ramp-downs in manufacturing, while BFSI, life sciences and services, and energy and utilities saw growth.

Ebitda margin stood at 12.4%, impacted by the absence of Q4 one-offs. TCV wins reached $141 million, slightly lower due to seasonality and a deal shifting to Q2. Manufacturing and ERP remain under pressure amid tariff uncertainties, though medical devices show positive traction. ERP, despite challenges, remains a $200 million business.

The company is focusing on mining its top 40 accounts, expanding strategic partnerships (SAP, Oracle), and driving AI-led transformation deals.

Gen AI and agentic AI investments are yielding marquee wins. The effective tax rate rose to 36% due to a one-time provision but is expected to normalize.

Sales efforts are being refocused on domain-specific roles and productivity. With zero debt and $266.6 million in cash, Birlasoft remains financially strong.

The near-term focus is on quarter-on-quarter execution, building a robust pipeline, and delivering sequential growth while maintaining margin stability.

We reiterate our rating to Hold and assign a new target price of Rs 428, valuing the stock at 18.7x FY27E EPS

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