Birlasoft shares crack 7% as Q3 show fails to excite, Nuvama says 'highly disappointing'

Birlasoft's revenue has declined in two of three quarters of FY25 and 9M margins have fallen by 300 bps YoY.

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26 Aug, 2025 12:21

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Shares of IT services player Birlasoft Ltd. fell seven percent in the morning session on February 12, after the information technology player reported a sharp fall in net profit for the quarter ended December 31, 2024.

Birlasoft posted a 1.5 percent rise in revenue for Q FY25, reaching Rs 13,627 crore. However, net profit dropped 27.4 percent on-year to Rs 1,169 crore due to higher employee costs and weak seasonal demand.

EBITDA fell 23.7 percent year-on-year to Rs. 1,634 crore, with margins shrinking to 12 percent, down 396 basis points.

At 9.45 am, Birlasoft shares were quoting Rs 494.3 on the NSE, lower by 2 percent compared to the previous session's close.

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"Birlasoft continues to disappoint on growth as well as deal wins. Revenue is likely to decline further in Q4 due to furloughs extension and client ramp-down. The weak exit rate, along with soft TCV, paints a dismal picture for FY26 as well," said Nuvama Institutional Equities.

The company indicated extended furloughs in Q4 resulting in a weak exit growth rate for FY25E. The demand environment continues to be uncertain with clients taking a "hold and wait" approach with IT spending. Goin ahead, the growth will be led by BFSI and E&U vertical while manufacturing & life-sciences with continue to struggle for a couple of quarters.

Birlasoft has had a highly disappointing FY25 on all fronts. Revenue has declined in two of three quarters and 9M margins have fallen by 300 bps YoY, said Nuvama Institutional Equities. "We continue to remain negative, as we see little respite in the near term." The brokerage maintained its 'reduce' rating, cutting its target price to Rs 465, from Rs 540 earlier.

HDFC Securities trimmed its target price on the firm to Rs 510 per share, down from Rs 620 earlier, while keeping its 'add' rating intact.

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