Birlasoft Q1 Results Review - Deferred Deal Ramp-Ups Led To Blip In Quarter: IDBI Capital

IDBI Capital Report

Birlasoft Ltd. reported subdued numbers amid challenging macros and weak discretionary spends. The 3% QoQ (in Rs. terms) decline in revenue was majorly due to challenges in operating environment, deferred ramp ups (manufacturing) and delayed decision making.

However, company reported green-shoots in manufacturing and revival in ramp up (in month of July) and expects it to continue further also. Further, the company aspires to have strong growth in FY25E on the back of strong deal pipeline and in BFSI and others verticals.

Management was also confident of Q2 to be better than Q1 led by $100 mn deal ramp up. We believe blip in this quarter will lead to sluggish growth for FY25 and FY26, hence we have cut our revenue estimates by ~0.9% and 1.8% respectively.

On the back of the same, we revise our target price to Rs 690 from Rs 780 (23 times EPS FY26E) with downgrading the stock to Hold.

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