Q3FY21 Company Update - Birlasoft Ltd - ICICI Direct

Birlasoft Ltd's (Birlasoft) dollar revenues increased 3.3% QoQ (up 2.3% YoY) to US$119.5 million, mainly led by healthy growth across verticals. The manufacturing vertical increased 2.9% QoQ, BFSI up 3.4% QoQ, lifescience up 5.1% QoQ. EBITDA margin increased 247 QoQ (up 350 bps YoY) to 16.4% mainly led by higher utilisation & SG&A rationalisation. PAT increased 39.4% QoQ (up 32.6% YoY) mainly led by higher operating margins and lower tax rate. The company has migrated to the new tax regime in the current quarter. Deal wins were at US$109 million (book to bill of 0.9x).

Valuation & Outlook

Acceleration in digital technologies, healthy deal pipeline, focus on multi-year, client mining, healthy order book, focus on niche verticals, cross selling opportunities and expansion in Europe & APAC bode well for long term revenue growth. In addition, cost rationalisation is expected to drive margins. Further, healthy cash balance could lead to inorganic expansion or healthy dividend payout. Hence, we maintain BUY rating with a revised target price of Rs. 310 (18x PE on FY23E EPS) (earlier target price of Rs. 220).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Birlasoft_CoUpdate_Feb21.pdf

Shares of Birlasoft Ltd was last trading in BSE at Rs.244.15 as compared to the previous close of Rs. 251.2. The total number of shares traded during the day was 66212 in over 2002 trades.

The stock hit an intraday high of Rs. 255.45 and intraday low of 241.55. The net turnover during the day was Rs. 16559985.

Source : Equity Bulls

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