🧵 At a Glance
Birlasoft Ltd, part of the CK Birla Group, plays the quiet midcap game in IT services, catering to BFSI, manufacturing, and life sciences clients. While profits have grown steadily and margins have stayed disciplined, the company’s revenue growth has clearly hit the snooze button. Add 134 working capital days to the mix, and you’ve got yourself a curry that simmers too long without boiling.
1️⃣ TL;DR: Biryani without the dum
- ❄️ Revenue CAGR: 10% over 5 years — sabr ka fal meetha nahi, flat hai
- 💥 FY25 Net Profit: ₹517 Cr (up from ₹292 Cr in FY19)
- 💰 Dividend payout: Healthy at 35%
- ⚙️ ROCE: 21%, among the better ones in midcap IT
- 🚩 Working Capital Days: Spiked from 72 to 134 (!!!)
- 📉 1Y Stock Return: -38% — even Wipro looks fast-paced now
- 💵 Fair Value Range: ₹380 – ₹450 (more below)
2️⃣ What business is Birlasoft in, anyway?
Birlasoft isn’t the flashy IT outsourcer. It’s your ERP uncle.
Here’s what it actually does:
- 🔄 ERP + Digital Transformation: Oracle, SAP, MS Dynamics
- 🏦 Key Verticals:
- BFSI
- Manufacturing (especially auto, industrial)
- Life Sciences
- Utilities
- 🧑💻 Projects include cloud migration, legacy modernization, IT consulting
Basically, not sexy like AI/ML, but pays the bills.
3️⃣ 5-Year Financial Recap: The Good, the Meh & the 🤨
| FY (₹ Cr) | FY20 | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|---|
| Revenue | 3,291 | 3,556 | 4,130 | 4,795 | 5,278 | 5,375 |
| Net Profit | 224 | 321 | 464 | 332 | 624 | 517 |
| OPM (%) | 12% | 15% | 16% | 11% | 16% | 13% |
| ROCE (%) | 18% | 22% | 25% | 17% | 30% | 21% |
| Dividend Payout | 25% | 30% | 27% | 29% | 29% | 35% |
| Stock Price | ₹114 | ₹255 | ₹377 | ₹683 | ₹679 | ₹424 |
🧠 Takeaway:
- Revenue grew slowly, but profit margins held firm (except FY23 dip).
- FY24 was peak profit, FY25 declined slightly.
- Stock peaked and fell 38% in FY25 — reality check after euphoric FY24?
4️⃣ What’s working ✅
- 💸 Debt-free and sitting on solid cash (~₹1,754 Cr in investments)
- 💻 ERP Focus means consistent annuity revenue from global clients
- 🧑💼 CK Birla Group Trust: Adds some institutional stability
- 📊 ROCE >20% consistently over 5 years
- 🪙 Steady dividend — and not just token ₹1 ones
5️⃣ What’s not 😬
- 🐢 Growth is painfully slow. 2% TTM revenue growth is basically inflation.
- 🧾 Working Capital Days = 134
Translation: Clients are ghosting their invoices harder than Tinder DMs. - 💼 Promoter holding stagnant at 40% — no skin in the upside game?
- 🔄 Volatile FII holding: Jumped to 23%, then dropped to 11%
Also: Despite decent PAT, EPS has barely grown in FY25.
6️⃣ Valuation 🍝
Let’s compare Birlasoft with midcap IT peers:
| Company | P/E | ROCE | Revenue Growth (3Y) | Remarks |
|---|---|---|---|---|
| LTIMindtree | 35.1 | 27% | 9.9% | Premium large-mid hybrid |
| Persistent Sys | 67.3 | 31% | 25% | Product engineering beast |
| Coforge | 41.8 | 27% | 17% | BFSI + Travel specialist |
| Birlasoft | 22.8 | 21% | 9% | Cheaper but slower |
🧮 Fair Value Range Calculation:
- EPS (FY25): ₹18.6
- Conservative P/E band: 20x – 24x
- FV Range = ₹370 – ₹445
At ₹424, Birlasoft is near the upper bound, meaning there’s not much upside unless growth improves sharply.
7️⃣ Verdict: Slow & Steady? Maybe too slow.
Birlasoft is the uncle in the IT family. Reliable, low-risk, but not the type who’s gonna suddenly land a 200% multibagger deal.
📉 Growth? Slowing
📊 Valuation? Reasonable
🧠 ROCE? Solid
💤 Excitement? Missing
If you’re okay with capital preservation + moderate yield, this works.
But don’t expect fireworks unless CK Birla launches a ChatGPT for Oracle SAP.
🔥 Tags
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✍️ Written by Prashant | 📅 18 June 2025
