Birlasoft Q2 Results: Profit Rises Over 5%, Revenue Meets Estimates

Birlasoft Ltd. has clocked growth that lived up to analysts' expectations in the July–September quarter.

Revenue of the IT services firm rose 3.73% to Rs 1,309.8 crore in the quarter ended September, according to a stock exchange filing on Tuesday. That compares with the Rs 1,290.84-crore consensus estimate of analysts tracked by Bloomberg.

• Revenue up 3.73% at Rs 1,309.8 crore (Estimate: Rs 1,290.84 crore).

• EBIT up 8.09% at Rs 185.64 crore (Estimate: Rs 174.04 crore).

• EBIT margin at 14.17% vs 13.60% (Estimate: 13.48%).

• Net profit up 5.47% at Rs 145.07 crore (Estimate: Rs 136.70 crore).

In dollar terms, the company’s top line rose 3% sequentially to $158.3 million. It was up 3.1% over the previous quarter in constant currency terms. Growth during the quarter was delivered by the manufacturing and financial services business, as well as digital and cloud. The U.S. continued to bring in more than 80% of the overall revenue.

Birlasoft has declared an interim dividend of Rs 2.50 per share for the ongoing financial year, payable by Nov. 8. As on Sept. 30, the company had cash and cash equivalents of $173.5 million.

"We are delivering robustly across all three fronts—growth, margins and deal wins," Angan Guha, chief executive officer of Birlasoft, said in a statement. "On the capabilities front, we continue to scale up our emerging tech skill sets and have also augmented our leadership team with the induction of a chief operating officer."

Selvakumaran Mannapan, an IT services veteran of 29 years, was appointed as Birlasoft COO on Oct. 18 for "transformative capacity building".

India’s $245-billon IT services industry is bracing for a slowdown—if not a total washout—in the fiscal ending March 2024, as high interest rates and inflation in the U.S. and beyond make clients cautious on their technology spending. While dealmaking remains robust, delayed deal conversions and elongated pipelines have forced some of India's biggest outsourcers to pare down their growth expectations.

Against that backdrop, Birlasoft clocked a total contract value of $271 million, with new deals bringing in $167 million and renewals the rest. That includes one $100-million-plus contract. The company has partnered with Cisco to drive network transformation for its customers. The number of days sales outstanding stands reduced to 52 days.

As on Sept. 30, the company had 278 clients, with 85 in the million-dollar-plus category.

Birlasoft is also one of the rare companies in the Indian IT services pack that saw its overall headcount grow in the second quarter. As of Sept. 30, the company had 12,235 employees—a net addition of 87. The attrition rate eased to 15% in July–September from 18.8% in April–June on a trailing 12-month basis, while utilisation levels increased 160 basis points to 86.5%. The company handed out its annual appraisals on Sept. 1.

"We have witnessed further improvement in our margin, even after implementing an organisation-wide compensation, on the back of multiple operational efficiency initiatives that we have been driving," Kamini Shah, chief financial officer of Birlasoft, said. "We continue to win deals, generate strong cash flows, and are seeing moderating attrition levels—all of which gives us the confidence to deliver a healthy performance for the full financial year as well."

Shares of Birlasoft closed 0.89% higher at Rs 547.15 apiece on the BSE as compared with a 0.37% decline in the benchmark Sensex. The results were declared after market hours.