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  • 24 May 2022
  • ICICIdirect Research

Birlasoft announces buyback at Rs. 500 per share (32% premium to last closing price)

BSOFT - 654 Change: -6.00 (-0.91 %)

News: Birlasoft reported strong numbers on margins in Q4. The revenue was up 2.8% QoQ/22% YoY to Rs.1101.4 crore while in dollar terms revenues were up 2.1% QoQ to US$146.4mn. EBITDA was up 7.2% QoQ to Rs.174.5 crore while margins were up by 66bps to 15.8% aided by lower other expenses. For FY22, the company reported 15.8% /16.2% growth in revenues in dollar/rupee terms to US$552mn/Rs.4130 crores. EBITDA margin was up 60bps to 15.5% in FY22. TCV for FY22 stands at US$696mn ( down 15% YoY) , out of which US$444m were new deals and rest is renewals. The company announces buyback of 7.8mn shares at Rs.500 per share amounting to Rs.390 crore. The company also declared dividend of Rs.3 per share. The company added 1153 professionals in FY22 taking its manpower strength to 12,204 persons. Attrition was up 290bps QoQ to 34.3%. The company re-appointed Dharmendra Kapoor as CEO & MD for next three years effective from June 1, 2022

Views: The company’s performance at EBITDA margin level for FY22 was strong and was in line with its guidance of 15%+ EBITDA for FY22. The high attrition remains a key challenge for the company which may impact near term growth in our view. Re-appointment of CEO & MD for 3 years address the market concerns and provides the stability as far as top management is concerned. Buyback at 32% premium to CMP and dividend could be taken positively by the street, if promoters are not participating in the buyback. The company need 22% CAGR growth over FY22-25 to reach its target of US$1bn revenue, which implies that acquisition(s) will play a key role to reach that target revenue

Impact: Positive