Birlasoft Quarter 2 results- 35% upside expected, worth investing in? | Birlasoft share review

The consolidated Net profit for the quarter increased by 49.2% in Q2 FY22. The revenue from operation increased by 18% from Rs.857 crore in Q2 FY21 to Rs.1,012 crore in Q2 FY22. The company displayed its highest utilization of 85.8%, till date. The Net income margin increased by 213bps QoQ and is expected to rise to 12%.

According to the quarter 2 results of the company, their main strength lies in the Manufacturing (43% of revenue) and Life sciences (24% of revenue) segments. The top earning sector, the manufacturing sector saw a growth of 22% YoY and 5% QoQ. This sector has been established as the growth driver by the management for the coming few quarters. The BFSI sector surprisingly clocked a growth of 10% QoQ and 15% YoY. The healthcare segment which has been suffering for the last few quarters, finally stabilized this quarter after a large deal went through successfully. The growth due to the new deal is already being reflected in the numbers.

The board has declared an interim dividend of Rs.1.50 per share for all the shareholders.

Birlasoft signed deals of Total Contract value worth $140 million in Q2 FY22.The company is seeing more short tenure deals. The company won a large deal worth $20 million in the US/EU segment, in this quarter.

The number of active clients stands at 280. The company has also given a second salary hike to all its employees. The company added 1,014 new employees in the last six months which led to the high rate of utilization as mentioned before. During the first half of FY22 430 freshers were hired.

In Q2 the EBITDA grew by 27% YoY but the cost pressures are expected to bring the EBITDA back to 17% in the next few quarters.

Management has set the company’s goal as $1 billion revenue by March and an EBITDA margin of 18% by 2025.

An EBIT CAGR of 24% is expected for FY21-23. The TCV is expected to grow to $1 billion. Analysts have recommended a BUY call with a price target of Rs.550. The CMP stands at Rs.407.20 so a potential upside of 35% can be expected.