Buy Birlasoft; target of Rs 335: Sharekhan

Sharekhan's research report on Birlasoft

Birlasoft posted below-than-expected reported USD revenue growth, while EBITDA margins remained in line with our estimates. Q2 saw healthy new deal TCVs of $138 million (up 23% q-o-q), but weak addition of active clients and employees. The company reiterated its double-digit revenue growth guidance and EBITDA of ~15% for FY2023. Company gave a positive outlook on BFSI but had a negative outlook on Lifesciences and Energy & Utilities. The overall situation is uncertain given the current macros, but the company is confident of achieving its guidance due to deals wins in H1FY23 and an expected decline in attrition rates for H2FY23.

Outlook

We maintain a Buy rating on Birlasoft with a revised price target (PT) of Rs. 335. At CMP, the stock trades at reasonable valuation of 15.7x/14.3x/12.8x FY23E/FY24E/FY25E EPS.

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Birlasoft - 221022 - khan