NEW DELHI: Birlasoft’s 600 per cent rally in the last 18 months made even seasoned investors take note and trim their stakes in the IT major in the last couple of months. But post a solid September quarter show, analysts believe the scrip has more steam left, with price targets on the counter suggesting up to 39 per cent potential upside.
Edelweiss finds the stock to rise to Rs 568. Anand Rathi Financial Services sees it at Rs 550. Emkay Global has a target of Rs 520 on the stock while ICICIdirect of Rs 475. The targets suggest up to 39 per cent upside over Friday’s stock price of Rs 410.
Birlasoft said its net profit jumped 49.2 per cent year-on-year (YoY) to Rs 103.1 crore for the September quarter compared with Rs 69.1 crore in the same quarter last year. Revenue from operations increased by 18 per cent YoY to Rs 1,011.7 crore from Rs 857.5 crore. The company signed deals of TCV $140 million in Q2, including net new TCV of $104 million.
Ebitda margin came in at 15 per cent, down 98 basis points sequentially but up 107 bps YoY. The sequential fall in margin was due to wage hikes, higher sub-contractor costs and investments amid a significant pickup in attrition across the industry. Analysts said it was partially offset by tailwinds from improvement in utilisation.
“Birlasoft missed its flattish Q2 margin guidance slightly as attrition spiked to 24 per cent and travel restrictions continued, leading to higher subcontracting costs (16 per cent of revenue),” said Anand Rathi. The brokerage, however, added that the net headcount addition was steady for the last three quarters, averaging 555.
IDFC First, Sterlite Tech among 5 buy ideas for the coming weeks
Money-making ideas
With the bulls on Dalal Street having gone under hibernation, the bears are having a gala time. Major largecap, midcap and smallcap indices have seen a Stop Lossight correction from their record highs hit earlier this month. That said, the market always offers an opportunity for investors to pick stocks even when the overall sentiment is a little low. Below, analysts have sorted out five such “buy” ideas that could reap returns for investors in the coming weeks.
BUY Sterlite Technologies | Target: Rs. 330 | Stop Loss: Rs. 286
The counter is in an uptrend where it is breaking out of the symmetrical triangle formation to resume its uptrend. Momentum indicator RSI is also breaking out above 60 after creating a base at around 40. MACD, meanwhile, is witnessing positive crossover and trading in the positive territory. On the upside, Rs. 318 is an immediate horizontal resistance while Rs. 330-350 will be the next target levels. On the downside, Rs. 387 provides immediate support while Rs. 277 will be the next support level.
(Santosh Meena, Head of Research, Swastika Investmart)
BUY Triveni Turbine | Target: Rs. 200 | Stop Loss: Rs. 167
The counter is in a classical uptrend with higher top-bottom formation where it is witnessing a breakout of bullish flag formation to resume its uptrend. It took support at 20-DMA during a small pullback with a positive crossover in momentum indicators RSI. On a weekly time frame, it has taken out multimonth resistance of Rs. 150 to enter into a new bullish territory and now Rs. 150 has become a strong base at any correction. On the upside, Rs. 200 is an immediate psychological resistance while Rs. 225 will be the next hurdle.
(Santosh Meena, Head of Research, Swastika Investmart)
BUY RAILTEL | Target: Rs. 151 | Stop Loss: Rs. 130
Some of the railway stocks witnessed great momentum in recent trading sessions, however, RAILTEL has to catch up with that momentum. It is forming higher lows formation in the strong demand zone of Rs. 130-110 and is ready to break out of the horizontal resistance line of Rs. 143. If it manages to cross the Rs. 143-mark decisively then we can expect a move towards Rs. 151-164 levels.
(Santosh Meena, Head of Research, Swastika Investmart)
BUY Minda Corp | Target: Rs. 155 | Stop Loss: Rs. 124
After showing weakness in the last two weeks, the stock price has witnessed a sustainable upside bounce this week. Currently, the stock price is making an attempt to stage an upside breakout of the larger consolidation at Rs. 140-141 levels. Hence, a sustainable upmove above this area could have a sharp positive impact on the stock price ahead. Buying can be initiated at the current market price, add more on dips down to Rs. 129; wait for the upside target of Rs. 155 in the next 3-4 weeks.
(Nagaraj Shetti, Technical Research Analyst, HDFC Securities)
Birlasoft has strength in non-ERP digital businesses like CRM, data analytics, app development and enterprise solutions. It mainly caters to manufacturing, BFSI, energy & utility and life science. The company is debt-free and has a healthy double-digit return ratio, with a RoCE of 19 per cent.
Among the key triggers for the stock would be strong revenue growth, said ICICIdirect, which is expected to be achieved via client mining, multi-year deals, expansion in Europe & APAC and focus on niche verticals. The brokerage expects dollar revenues to grow at 16.5 per cent compounded annually. It also sees a margin expansion of 230 basis points to 17.2 per cent over FY21-23.
