Ashish Dhawan Stocks: 35% upside seen in Birlasoft shares says brokerage; here is why?

Renowned investor Ashish Dhawan-backed Birlasoft Limited shares have the potential to surge nearly 35 per cent, brokerage firm Monarch Networth Capital Limited (MNCL) said in its report. The optimism is fuelled by its growth potential as this small-cap IT company is on a trajectory to achieve its set target of US $1 billion revenue by FY25E, the report said. 

Monarch puts Birlasoft as a high-conviction investment idea with a target price of Rs 480 apiece. It said that the company’s investment in capabilities across digital, cloud and ERP and its long-standing partnership with platform providers puts Birlasoft in an advantageous position. 

The company’s competence in core backend charts a higher degree of customer confidence in Birlasoft’s ability to consult and execute integrated transformation projects, enabling it to ride the accelerating digital transformation wave, MNCL further said in its research report. 

MNCL ascribe a 20x P/E multiple on FY24 EPS, and believes it is in a sweet spot to consult clients on desired digital capabilities and handhold clients through their digital transformation journey in a cost-effective manner.  

The company to accelerate growth pace has devised a slew of strategies to re-position its bouquet of offerings, strengthen foundation and improve Go-to-Market strategies post-merger/ demerger with KPIT Technologies, thereby improving TCV wins, growth visibility, and margin profile, MNCL said. 

Ashish Dhawan during the March quarter trimmed his stakes in Birlasoft Ltd by 0.5 per cent reducing the total holding to about 1.3 per cent (3,600,000 equity shares). The investor publicly holds 15 stocks with a net worth of over Rs 1,963.4 crore, as per the stock analysis website trendlyne.com. 

The stock on Monday slipped around 5 per cent lower to Rs 340 per share, trading near its 52-week low of Rs 336.5 per share touched on May 12, 2022. The counter has dipped 40 per cent year-to-date as compared to around an 11 per cent fall in the S&P BSE Sensex during the same period.