Buy Birlasoft: target of Rs 240: Sharekhan

Sharekhan's research report on Birlasoft

Company’s USD revenue is likely to grow by 2% q-o-q to $118 million in Q3FY2021, as Invacare revenue stabilises and incremental revenue contribution from deal that was spilled over to Q3. Expect margin to rise 50 bps q-o-q to 14.4%. Management is aiming for USD revenue growth of 12-15% in FY2022E, led by clients’ higher digital spends. We believe company can comfortably achieve top-end of its target led by strong execution and large deal wins. Management believes that the strong relationships with Oracle and SAP would help it grab opportunity from any increase in spends on either product.

Outlook

We maintain a Buy rating on Birlasoft Ltd and raise the price target (PT) to Rs. 240 given strong revenue growth potential, scope for margin improvement and reasonable valuations.