Birlasoft (BSOFT) Q2 24/25 earnings summary

Executive summary

• Revenue for Q2 FY25 grew 4.5% year-over-year and 3.1% sequentially to ₹13,682 million ($163.3M), with broad-based growth across Manufacturing, BFSI, and Energy & Utilities, and strong cash generation leading to a 29% YoY increase in cash and cash equivalents.

• Sequential revenue growth returned, driven by ramp-up of delayed projects and new consolidation deals, though these required upfront investments and pricing flexibility, impacting margins.

• Net profit attributable to owners was ₹1,275.06 million, with a net profit margin of 9.3%, and basic EPS at ₹4.59.

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

• Deal pipeline remains healthy, with about 50% of new deals from net new or existing new clients and TCV of $136M in Q2FY25.

Financial highlights

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

• EBITDA for the quarter was $19.7 million (₹1,653M), with a margin of 12.1%, down from 14.7% in Q1 and 15.8% YoY.

• PAT for the quarter was ₹1,275M ($15.2M), with a net profit margin of 9.3%.

• Cash and bank balance at quarter-end was $221.8 million (₹18,587M), up 27.8% after a $13 million dividend payout.

• Operating cash flow was $12.9 million, with collections at $176 million, the highest in six quarters.

Outlook and guidance

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

• Margin improvement is expected to begin in Q4 and continue over the next several quarters as new deals mature and operational levers are executed.

• Management remains focused on improving deal flow and margins, targeting a return to 15-16% EBITDA margin over the next 4-6 quarters.

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