Stock in Action - Birlasoft

Highlights

1- Birlasoft's financial performance has shown growth over the past year.
2- Birlasoft share price analysis indicates a bullish trend in the market.
3- Birlasoft's quarterly earnings report highlighted continuous profit growth.
4- Birlasoft's gains recently from ₹600 to ₹700  in June month.
5- For Birlasoft's stock analyst forecasts positive trends for the future.
6- Birlasoft is currently trading at ₹694.15, showing a 3.26% increase as of 11:54 am on the NSE.
7- Nifty IT index has seen a rise of 5.91% in the last month, while Birlasoft is up 18.48%.
8- Birlasoft's stock performance has been impressive, gaining 106.65% over the past year.
9- NIFTY gain comparison reveals that Birlasoft's growth of 106.65% outperformed NIFTY's 25.02% gain in the same period.
10- Nomura has retained its buy rating on Birlasoft, setting a target price of ₹860.

Birlasoft Share is in Buzz?

Birlasoft has been making headlines with its impressive financial performance for the quarter ending March 2024. Birlasoft's standalone net sales surged to ₹1363 crore, up from ₹1343 from the December quarter. Additionally, net profit rose to ₹624 crore up from ₹332 crore from the previous year. These robust financial results have sparked interest in Birlasoft's shares among investors & market analysts.

Nomura has upheld its buy rating on Birlasoft, with a target price of ₹860. Despite a challenging demand environment and expected range-bound margins due to necessary investments, the global investment bank noted that the company will seek potential M&A opportunities.

Why Should I Invest in Birlasoft Shares?

Investing in Birlasoft shares requires a thorough understanding of its financial health, market position & potential risks. Here's a detailed analysis to help you make an informed decision.

Birlasoft’s Financial Performance

Birlasoft has shown a consistent upward trend in its financial metrics. company's Operating Profit stood at ₹836 crore in March 2024, up from ₹522 crore in March 2023. Earnings per share (EPS) also increased to ₹22.61 from ₹12.06 over the same period. With these positive indicators, the stock price is up only 3.43% over the past six months but has achieved a substantial return of 106.65% over the last 12 months. The company benefits from its strong association with the CK Birla Group, a diversified conglomerate with a total revenue of $2.8 billion.

Analyst Recommendations

Nomura reaffirmed its buy rating on Birlasoft, setting a target price of ₹860. They noted a challenging demand environment and anticipated stable margins, necessitating ongoing investments. The global investment bank also highlighted Birlasoft's strategic focus on exploring potential M&A opportunities.

New Deals

During January-March, the CK Birla Group company secured contracts totaling $240 million. This includes new deals valued at $107 million and contract renewals worth $133 million. Compared to the previous year, the new deal wins decreased from $115 million to $107 million. Sequentially, there was an increase from $94 million in this metric.

Technical Chart

The technical chart of Birlasoft (Bsoft) indicates a trend reversal in the weekly timeframe. The stock reached a peak of around ₹850 in February 2024 but has since been in a downtrend, with investors booking profits leading to a low of approximately ₹572 in May 2024. However, there has been a reversal in the weekly timeframe, with the stock trading near ₹700, up from its recent low of ₹600. If this uptrend continues investors may soon target ₹800 initially followed by retesting the previous high of ₹850.

Conclusion

Investing in Birlasoft shares presents compelling opportunities for traders and investors, supported by its positive market performance and positive outlook from brokerages. The company's strong financial performance, attractive Return on Equity (ROE) and Return on Capital Employed (ROCE), along with its debt free status, highlights reasons to consider investment. However, prospective investors should conduct thorough evaluations of the company's financial statements and technical as well as monitor its performance relative to the Nifty IT index before making investment decisions.