Birlasoft (BSOFT) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 revenue grew 4.5% YoY to ₹13,682 million ($163.3M), with broad-based growth across top accounts and key verticals, especially Manufacturing, BFSI, and Energy & Utilities.

• Several delayed projects commenced, driving improved revenue and reflecting the ability to win consolidation deals and increase wallet share.

• Strong cash generation led to a 29% YoY increase in cash and cash equivalents, with DSO at 58 days.

• Interim dividend of ₹2.5 per share recommended, with a record date of October 31, 2024.

• Management remains focused on margin recovery and operational efficiency as investments begin to yield results.

Financial highlights

• Q2 FY25 revenues grew 4.5% YoY in INR and 3.2% in USD, reaching $163.3 million; sequential growth was 3.1% in INR and 2.6% in USD.

• EBITDA for the quarter was $19.7 million (₹1,653M), with EBITDA margin at 12.1%, down from 15.8% YoY.

• PAT at ₹1,275M ($15.2M), net profit margin at 9.3%, and EPS (basic) at ₹4.59.

• Top 5, 10, and 20 accounts grew 3.9%, 2.4%, and 2.3% QoQ, contributing 36.7%, 52.5%, and 64.9% of total revenue.

• Total contract value (TCV) of deals signed in Q2FY25 was $136M, with $89M from new deals.

Outlook and guidance

• Growth momentum is expected to continue, though Q3 is anticipated to be soft due to furloughs and a planned salary hike, impacting margins.

• Margin improvement is expected from Q4 onwards, with every subsequent quarter targeted for further recovery.

• Management aspires to return to 15%-16% margin levels over the next four to six quarters.

• Positioned to capitalize on a recovering demand environment, with early recognition from industry analysts.

• Deal pipeline remains strong, with about 50% of new deals in net new or existing new categories.