- 04 Aug 2022
- ICICIdirect Research
Birlasoft numbers impacted by couple of client specific issuesBSOFT - 265 Change: -3.30 (-1.23 %)
News: The company reported 2.3% QoQ/17.7% YoY CC revenue growth for the quarter while dollar revenues were up by 1.5% QoQ/15.8% YoY. There was an impact of US$2mn on the revenues due delay in couple of projects due to re-alignment of client business models at their end. Geography wise US (85% of mix) reported 4.8% QoQ growth while Europe/RoW witnessed a sequential decline of 16.6% /9.3%. Vertical wise, BFSI & manufacturing ( 64% of mix together) reported 2.8%/5% QoQ growth while Energy & Utilities reported decline of 3.9%/0.4% QoQ. The company’s EBITDA was down 3% QoQ while margins were down 114bps QoQ to 14.7% due to 4%/10% QoQ increase in employee/other expenses. Net profit was down 9.2% QoQ to Rs124 crore. TCV was up 21% YoY while it was down 16.6% QoQ to US$185mn for the quarter. The company has changed accounting of their LTM attrition to align with the industry and it is down 150bps QoQ to 27.9%. It added 361 employees during the quarter to take it headcount to 12,565.
View: The company’s revenue for the quarter was impacted by delay in couple of projects, one of them has started at the end of Q1 while second one is yet to start. The company ruled out any recession related delay and insist that it was client specific issues. The company sees robust demand pipeline as the funnel has increased from US$1.2bn to US$1.7bn now and expecting revenue recovery from Q2 onwards and maintained 15% revenue guidance for FY23 which implies 5% growth each in next 3 quarters. On margin side, they maintained EBITDA margin guidance of 15% despite wage hike in Q2 due to i) improvement in utilisation ii) moderation of sub-contractors costs.