Birlasoft hits fresh 52-week high after Nomura sees nearly 30% upside, forecasts strong growth

Shares of Birlasoft surged more than 2 per cent in morning trade on Friday to hit a fresh 52-week high after global financial services firm Nomura recommended a ‘Buy’ rating on the stock.

In its note dated August 24, the brokerage predicted an industry-leading growth trajectory in the medium term for Birlasoft. The analysts have assigned a target price of Rs 610, indicating a potential upside of nearly 30 per cent from the closing price of Rs 474.90 on Thursday.

The midcap IT stock was trading 2.04 per cent higher at Rs 484.60 apiece on BSE at 11:58 AM.

The company's shares have seen a significant rise in the past three months with a gain of 44 per cent. So far this year the stock has surged 61 per cent. In the last one-year period Birlasoft shares have gained 50 per cent.  

Nomura expects significant transformation under new leadership

In its research note Nomura said that significant transformation is underway with the new leadership and it expects Birlasoft to head towards industry-leading growth in the medium term.

According to the brokerage, the ongoing organisational changes would drive stability and revenue growth for the company.

Highlighting the profound changes that have taken place under CEO Angan Guha's leadership, the brokerage emphasised Birlasoft's organisational transformation behind the potential growth. For years, the company had lagged behind its peers in terms of revenue growth due to challenges in deal win-to-revenue conversion and low annuity revenue. However, under Guha's leadership, the company has undergone a series of strategic shifts aimed at streamlining operations, revitalising growth and enhancing accountability, the brokerage said.

The results of these efforts are already apparent in the company's financial performance.

In Q1FY24, Birlasoft reported notable improvements across key metrics. The company’s revenue grew by 2.96 per cent to reach Rs 1,262.8 crore while net profit increased 22.62 per cent to Rs 137.8 crore. For the fiscal year ending on March 31, 2023, Birlasoft achieved annual revenue of Rs 4,794.8 crore.

With the positive momentum generated by the ongoing strategic initiatives, Nomura analysts anticipate the company's top-line to further increase to Rs 5,917.8 crore in FY24 and Rs 6,834.1 crore in FY26.