Buy Birlasoft; target of Rs 470: Sharekhan

Buy

Sharekhan's research report on Birlasoft

Revenue grew by 2.7% q-o-q in constant currency (CC) terms, beating our estimates of 0.9% q-o-q CC growth, driven by decent growth across manufacturing and BFSI verticals. EBITDA margin expanded 168 bps q-o-q to 15.3% on lower gross margins as well as lower SG&A. Management is optimistic about exiting FY24 with 16% EBITDA margin. Company signed TCV deals of $146 million, down 49% q-o-q in-line with expectations after strong signings in Q3FY23 and Q4FY23. The management stated they would endeavour for $200 million of signings every quarter.

Outlook

With consecutive strong quarters, we believe the turnaround for Birlasoft is on track. Hence, we maintain Buy on Birlasoft with revised price target (PT) of Rs 470. At the CMP the stock trades at 19.4/16.5x its FY24/25E EPS.

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Birlasoft - 28 -07 - 2023 - khan