Birlasoft Ltd. share price target

Improving client mining, healthy deal pipeline, cross selling opportunities, increase in deal sizes, project ramp ups, reversal of discounts and anticipated higher net new growth bode well for long term revenue growth. Further, robust margins and healthy cash balance (inorganic expansion or healthy dividend payout) prompt us to maintain BUY rating with a revised...

Sustained improvement in margins expected; going forward Birlasoft reported healthy margins in the quarter led by higher utilisation and offshoring. Going forward, we expect margins to improve mainly led by pyramid rationalisation, rationalisation of support staff & sub-contracting cost and increase in annuity revenues & fixed price projects partially offset by investment in reskilling of employees & geographic expansion. Hence, we expect margins to improve 259 bps YoY to 14.5% in FY21E and another 130 bps YoY to 15.8% (the company has guided margins to sustain over...

Birlasoft Ltd (Birlasoft) dollar revenues declined 4.6% QoQ mainly due to milestone achievement in large deal won in lifescience segment (which declined 20.5% QoQ), discounts and project deferrals. However, the company continues to execute well on margins front, which improved 158 bps QoQ (up 288 bps YoY) to 13.9% mainly led by rationalisation of SG&A; expenses and higher utilisation partially offset by higher onsite revenues. Net profit increased 22.7% QoQ to | 69.1 crore due to higher other income. The company has declared a dividend of | 1/share. Birlasoft's order book is...

Revenue from operations declined 1.6% QoQ to | 1061.3 crore (vs. our estimate of | 1092.6 crore). Revenues from IT services and solutions declined 6.6% QoQ to | 563.6 crore while revenue from the Engineering division grew 4.7% QoQ to | 497.6 crore Reported EBITDA was down 208 bps QoQ to 11.5%, largely due to...

3QFY19 revenue declined 1.7% QoQ in constant currency (3% miss). While Engineering SBU (43% of revenue) grew 6.4% QoQ, IT Business dragged with a decline of 7.5% QoQ 16 January 2019 due to completion of a few large projects. EBITDA margin shrank 60bp QoQ (excluding translation loss) 110bp miss due to weaker revenue. PAT declined 25% QoQ (+6% YoY) to INR656m, 14% below our estimate due to the operational miss. 3QFY19/9MFY19 data of the IT and Engineering businesses. The key surprise for us was the 9MFY19 EBITDA margin in Engineering Services, which stood at 11.8% v/s 15.4% for IT Services.

Maintain BUY with TP of Rs 285, 13x Sep-20E EPS. KPIT Tech (KPIT) posted in-line revenue (PES, Digital and Product led growth), profitability beat (business-mix, utilisation). Revenue came at USD 152.5mn, 1.3/7.4% QoQ/YoY. EBITDA% stood at 13.6%, +147bps QoQ and margins expected to improve ahead with lower G&A.; Revenue guidance of 8 to 10% YoY maintained (9.7% YoY in 1HFY18), while EBITDA margin guidance raised to 14% (ex-transaction expense) vs. 11.5 to 12.5% earlier.

ICICI Securities Ltd | Retail Equity Research KPIT reported better than expected margin performance in Q2FY19 while dollar revenues were in-line with our estimates. Revenues in constant currency grew 2.9% sequentially on the back of healthy growth in engineering services. Among geography, dollar revenue growth was led by Europe (15.5% QoQ). EBITDA margins surprised on the positive side and expanded 150 bps QoQ to 13.6% (above our estimate of 11.1%). Better than...

Sustainable margins to aid Profitability; Upgrade to BUY KPIT reports a muted Q2FY19 with USD revenue improving by 1.3% QoQ (2.9% QoQ in CC terms) to USD 153mn (DCMe: USD 153mn) led by engineering, technologies and products & platforms business. Rupee revenues improved 6.4% QoQ to ` 10,789mn (DCMe: ` 10,691mn) helped by INR depreciation. EBIT margin improved 73bps QoQ to 10.2% (DCMe: 7.9%) supported by operational efficiencies and FX tailwind which offset the negative impact of wage hike during the quarter. PAT improved 6%...

1Q Action Replay: Revenue Below Estimate, Margin Exceeds Estimate KPIT Technologies (KPIT) has delivered a mixed performance in 2QFY19. While its USD revenue grew by 1.3% QoQ to US$152.5mn (1.4% below our estimate), EBITDA margin rose by a robust 147bps QoQ. In CC terms, revenue rose by 2.9% QoQ. While IES (-5.9% QoQ) and SAP (-2.6% QoQ) businesses again pressurised revenue, USD revenue from Product Engineering and Products & Platforms (P&P;) businesses grew by a healthy 5.1% QoQ and 33.7% QoQ, respectively. Notably, P&P; business is lumpy in nature. Beating our estimate by 222bps, EBITDA margin expanded by a robust 147bps QoQ to 13.6% despite wage hike impact of 220bps owing to INR depreciation...