Birlasoft CFO Expects Margins Back At 16% After Three To Four Quarters

Birlasoft Ltd. may take up to four quarters to get its Ebitda margins back on the 15–16% levels, the company’s Chief Financial Officer Kamini Shah has said.

Birlasoft, which released its earnings for the second quarter of the financial year 2024–25 on Wednesday, reported Ebitda margins at 12.1% for the period. This was down from 15.8% that the company had reported in the year-ago period.

Talking to NDTV Profit, Shah said that while margins will start improving from Q4 of the current financial year, it would take time for them to reach the 15–16% levels. “While I would wish for it to be in Q4, I don't think that will happen,” she added.

On the efforts undertaken by the company to get margins back on track, the CFO said, "We're doing multiple things on various fronts to get our margins back on track."

Elaborating further, she added, “Our on-site ratio is definitely higher, but as we consolidate and mature in some of these deals, we should be able to move our ratios more toward offshore, which is a key lever. The utilisation of the company is lower than it used to be in the past. So that's going to be a priority area."

The company, Shah said, is "looking at general and administrative expenses as well. Realistically, I think it will take at least three to four quarters before we reach the 15-16% stage we previously achieved.”

The company will continue to ensure that its revenue growth is in line with its aspirations while also focusing on margin recovery, the top executive assured, adding that Birlasoft does not want to see its margins at the Q2 levels.

“I also wanted to highlight that we are focused on profitable growth. To that extent, we are concentrating on consolidation deals this quarter, as they provide a higher share of wallet and an opportunity to play more in the digital and transformation space,” she said.

However, the growth in Q3 is going to take a hit because the company is giving out a pay hike to employees starting Oct. 1.

“Q3 is seasonally weak due to furloughs, and we are also implementing a wage hike starting Oct. 1, which will impact margins for Q3. But starting Q4, we will improve margins quarter-on-quarter,” Shah explained.

Shares of Birlasoft closed 5.59% lower on Thursday at Rs 567.40 apiece on the NSE against the benchmark Nifty 50's dip of 0.15%.