Mehabe score: 6 G Factor: 3 Piotski Score: 8 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 8.
Description
Birlasoft is engaged in Computer programming, consultancy, and related activities. It provides software development and IT consulting to its customers predominantly in Banking, Financial Services, and Insurance, Life Sciences and Services, Energy Resources and Utilities, and Manufacturing. The Company’s registered office is in Pune. It is part of The CK Birla Group, Birlasoft, comprising over 10,000 plus professionals.
Main Points
Services
Digital Services (38% of Revenues) – Data Analytics, Connected Products, Intelligent Automation, Cloud Blockchain.
Enterprise Technologies and Services (50% of Revenues) – Oracle and JD Edwards, SAP, Infor, Microsoft. # #Site:BSOFT
Market Cap:
Rs 11,031 cr
Price:
397.0
Trading pe:
34.4x
Book-value:
78.5/share
Div yield:
0.88 %
Earning yield:
4.55%
Face-value:
2.00/share
52week high:
421.35
52week low:
88.05
Technical Analysis
Stock trades at 397.0, above its 50dma 336.21. It also trades above its 200dma 252.38. The stock remains bullish on techicals
The 52 week high is at 421.35 and the 52week low is at 88.05
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– has been maintaining a healthy dividend payout of 24.62%
-Debtor days have improved from 79.00 to 53.20 days.
Weakness
–
Competition
– The industry trades at a mean P/E of 32.5x. Happiest Minds trades at the industry’s max P/E of 108.0x. BSOFT trades at a P/E of 34.4x
– Industry’s mean G-Factor is 3.8 while the mean Piotski score is 9.0. BSOFT has a G-Factor of 3 and Piotski scoreof 8.
– Average 1 month return for industry is 16.9%. The max 1- month return was given by Happiest Minds: a return of 31.81 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 903.0 cr compared to Rs 907.0 cr for period ended Mar 2020, a fall of 0.4%
Operating Profits reported at Rs 152.0 cr for period ended Mar 2021 vis-vis 117.0 for period ended Mar 2020 .
Operating Margins expanded 393.3 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 3.57 compared to Rs 3.48 for previous quarter ended Dec 2020 and Rs 2.5 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 3556.0 cr for period ended Mar 2021 vis-vis sales of Rs 3291.0 cr for the period ended Mar 2020, a growth of 7.5%. The 3 year sales cagr stood at 16.5%.
Operating margins expanded to 15.0% for period ended Mar 2021 vis-vis 12.0% for period ended Mar 2020, expansion of 300.0 bps.
Net Profit reported at Rs 321.0 cr for period ended Mar 2021 vis-vis sales of Rs 224.0 cr for the period ended Mar 2020, rising 30.2%.
Company recorded a Net Profit CAGR of 8.3% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 558.0 cr for period ended Mar 2021 vis-vis Rs 312.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 16.0% compared to 14.0% over the last 3 Years. – The stock has given a return of 342% on a 1 Year basis vis-vis a return of 32% over the last 3 Years. – The compounded sales growth on a TTM bassis is 8% vis-vis a compounded sales growth of 16% over the last 3 Years. – The compounded profit growth on a TTM basis is 47% vis-vis a compounded profit growth of 8% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 17.4% vis-vis 17.52% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 23.9% vis-vis 24.48% for Dec 2020
Conclusion
– is almost debt free.
– has been maintaining a healthy dividend payout of 24.62%
-Debtor days have improved from 79.00 to 53.20 days. –
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 336.21 and is trading at 397.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
