Brokerages cut target price on Birlasoft, weak discretionary demand to impact near-term growth; shares dip over 1%

Over the past six months, Birlasoft shares have risen around 20 percent.

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26 Aug, 2025 12:21

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Birlasoft shares fell in early trade on April 30 as the software player reported revenue of $163.9 million, growing 1.6 percent on a sequential basis in constant currency terms.

In rupee terms, revenue came in at Rs 1,362.54 crore, up 1.45 percent QoQ while net profit was up 11.81 percent at Rs 180.8 crore.

Birlasoft's revenue growth was strong from the top 5 clients but the number of active clients declined to 259, with continued client mining and pruning

initiatives.

At 9.17 am, shares of Birlasoft were quoting Rs 665.5 on the NSE, lower by 1.4 percent compared to the previous close.

Nomura expects a continued pullback in discretionary and transformation demand (given the high project-based nature of work) and weak total contract value (TCV) to limit near-term revenue growth.

The international brokerage cut its TP on Birlasoft to Rs 860, which was Rs 950 earlier. Nomura said the discretionary slowdown will likely hurt near-term growth, but retained its buy call on a medium-term strategy outlook.

EBIT margins were at 14.7 percent, higher by 30 bps on a quarterly basis, since the firm saw benefits from operating efficiency measures, which more than offset headwinds from a dip in utilisation and lower offshoring, said Nuvama Institutional Equities.

The brokerage downgraded Birlasoft to 'reduce', cutting its price target to Rs 610 per share, down from Rs 810 earlier.

"Birlasoft delivered a better-than-expected growth and margin performance in FY24. However, flat TCV and no margin expansion shall keep earnings growth subdued  in near term, which makes current valuations appear expensive," said Nuvama.

However, the brokerage is positive on the company’s long-term potential, driven by its strong capabilities in ERP and healthcare segments, but in the near-term, the risk-reward ratio looks unfavourable.