Sharekhan has given Buy recommendation for Birlasoft with a target price of Rs. 470 in its research report issued on May 24, 2022

Sharekhan’s research report on Birlasoft

Birlasoft Limited (Birlasoft) reported better-than-expected EBITDA margin and net profit. Revenue missed the mark owing to completion of a transformation work. New deal intake, growth in top accounts, and client mining stayed healthy. We expect revenue growth to accelerate in FY2023, led by healthy deal intake, good client mining, and pick-up in enterprises solution revenue. EBITDA margin to remain stable with an upward bias, aided by lower subcontractor expenses, pyramid improvement, and better pricing. Management aims to generate $1 billion in revenue over the next three years, implying a 22% CAGR. We expect revenue/earnings to register a 16%/18% CAGR, respectively, over FY2022-FY2024E.

Outlook

We maintain Buy with a revised PT of Rs. 470, given strong earnings growth potential, healthy cash position, and higher payout ratio.

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