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    Birlasoft Q1 FY27 earnings call

    BSOFT
    Information Technology·28 Jul 2026
    Management Summary

    Birlasoft reported a Q1 FY27 with 0.3% constant currency revenue growth and normalized EBITDA margins of 16.1%. Deal signings were robust at $168.7 million, up 20% YoY, with a significant AI component. While BFSI and LSS verticals performed well, Manufacturing and E&U experienced continued softness. The company maintains a strong balance sheet and is focused on sustaining momentum, expanding its sales team, and leveraging AI capabilities.

    Highlights

    5

    • Revenue grew 0.3% QoQ in constant currency, indicating a return to growth.

    • EBITDA margins normalized to 16.1%, closer to the sustainable range.

    • TCV signings were strong at $168.7 million, up 20% YoY, including several AI-led engagements.

    • Cash and cash equivalents increased to INR2,878.6 crore, up 9% QoQ and 26% YoY, reflecting strong cash collections.

    • DSO improved to 55 days, which is considered among the best in the industry.

    Concerns

    4

    • Revenue was flattish in dollar terms QoQ, despite CC growth.

    • Softness continued in Manufacturing and E&U verticals, offsetting growth in BFSI and LSS.

    • Potential small dilution in Q2 margins due to wage hikes, though expected to be recovered by productivity improvements.

    • A mismatch exists between TCV growth and revenue growth due to pricing pressure from AI-led deals.

    Key financials

    Single quarter

    10 metrics
    1. 01Revenue145.2 Mn0%QoQ
    2. 02Revenue₹1,379.4 Cr+7.4%YoY
    3. 03EBITDA Margin16.1%
    4. 04EBITDA₹222 Cr+40.3%YoY
    5. 05PAT16.9 Mn

    Segment breakdown

    BFSI
    — Growth
    LSS
    — Growth
    Manufacturing
    — Performance
    E&U
    — Performance
    List

    Order Book

    high confidence

    Total Value

    USD 168.7 million

    as of 2026-06-30

    quantified
    20.0% YoY

    Inflow this qtr

    USD 168.7 million

    Execution

    Deal tenures are between 18 months to 24 months, long-term

    "Management noted strong deal signings for the quarter, including AI-led engagements, and highlighted that Q1 is traditionally a weak quarter for signings, with H1 FY27 expected to be better than H1 FY26."

    Source:
    Prepared remarks

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Cash ₹2,878.6 crores

    The company has a robust balance sheet and healthy margin profile, providing the ability to make judicious investments.

    Guidance & targets

    10
    CategoryTargetPriority
    Margin
    EBITDA Margin
    15%-plus
    		Medium
    Margin
    Q2 Margin Impact from Wage Hike
    half of 170-200 bps
    		Medium
    Margin
    Full Year Margin Impact from Wage Hike
    fully recovered
    		Medium
    Vertical Performance
    E&U Vertical Recovery
    turn around
    		Medium
    Vertical Performance
    Manufacturing Vertical Recovery
    momentum shift
    		Medium
    Sales
    Sales Team Expansion
    substantial increase
    		Medium
    Order Book
    H1 Deal Signings
    much better than last year H1
    		Medium
    Order Book
    Full Year Deal Signings
    better than last year's signings
    		Medium
    Order Book
    Q2 Order Book
    similar or more than Q1
    		Medium
    Tax Rate
    Effective Tax Rate (ETR)
    under 30%
    		High

    What to watch in Q2 FY27

    5

    Sequential Organic Revenue Growth

    next quarter
    Current0.3% CC QoQ growth
    TargetSustained sequential organic growth

    Why it matters

    To confirm the company's ability to maintain momentum and deliver consistent growth.

    But first, Amit, I have to get the company to deliver quarter-on-quarter organic growth. If I can deliver 3, 4 quarters of organic growth, then it becomes much more easier to consume an acquisition.

    Risks & concerns

    5
    RiskSeverity

    Wage hike impact on Q2 margins

    Wage increases starting July 1 are expected to cause a small dilution in Q2 margins, though productivity improvements are planned to offset this over the year. — Management acknowledged

    medium

    Softness in Manufacturing and E&U verticals

    These two verticals continue to experience weakness, with recovery expected in a couple of quarters for Manufacturing and from Q3 onwards for E&U. — Management acknowledged

    medium

    Mismatch between TCV wins and revenue growth

    Pricing pressure from AI-led deals means that while TCV is strong, the revenue realization takes a couple of quarters to streamline, leading to a temporary mismatch. — Analyst acknowledged

    medium

    Volatile market conditions

    The market remains very volatile, impacting the ability to give specific numerical guidance. — Management acknowledged

    low

    Capital allocation strategy for large cash balance

    The company has a significant cash balance, and analysts are keen on a defined capital allocation policy, with management stating the Board is seized on the matter and will take actions at the appropriate time, focusing on capability-based M&A. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “We believe that from here on, we should be looking to sustain the momentum. We will work on the momentum. However, we still have 2 months for the quarter to finish. So execution remains important. But we are feeling confident that the momentum will sustain. That is number one. On the vertical-wise demand, look, the demand trajectory has not really changed too much in the market. But from our perspective, we feel Financial Services will continue to be strong for us. We also feel LSS will remain strong. Manufacturing, we feel the weakness will continue for some more time, but we are putting in a lot of investment to turn around Manufacturing.”

    Analyst sought clarity on the sustainability of CC growth and specific vertical performance, which management addressed by confirming confidence in momentum and outlining vertical-specific outlooks.

    asked by Dipesh Mehta

    2 min read7 chapters

    Detailed Narrative

    01

    Q1 FY27 Performance Overview

    Birlasoft delivered a revenue growth of 0.3% in constant currency quarter-on-quarter, reaching $145.2 million (INR1,379.4 crore). In rupee terms, revenue grew 2.3% sequentially and 7.4% year-on-year. EBITDA margins normalized to 16.1%, with EBITDA at INR222 crore, up 40.3% year-on-year. The company reported a PAT of $16.9 million (INR161 crore) and a basic non-annualized EPS of INR5.72 per share.

    02

    Deal Wins and AI-led Engagements

    The company recorded strong deal signings, with TCV of $168.7 million, representing a 20% year-on-year increase. This includes several AI-led engagements, such as being selected as a strategic AI partner for a leading financial services player in the U.S. and a multiyear AI-led transformation deal for a European banking group. Management noted that many closed deals now have an AI component, and deal tenures are long-term, typically 18-24 months.

    03

    Vertical Performance and Outlook

    Sequential growth in BFSI and LSS verticals helped offset softness in Manufacturing and E&U. Management expects Financial Services and LSS to remain strong. Manufacturing is anticipated to continue experiencing weakness for some time but is a focus area for investment, with a turnaround expected in a couple of quarters. E&U is also expected to see softness for one more quarter before turning around from Q3 onwards.

    04

    Margin Trajectory and Wage Hike Impact

    EBITDA margins normalized to 16.1% in Q1, aligning with the company's target of 15%-plus. A wage hike effective July 1 is expected to impact Q2 margins by 170-200 basis points, with about half of this impact likely to be seen in Q2. However, management anticipates recovering the full impact through productivity improvements by the end of the fiscal year.

    05

    Balance Sheet and Capital Allocation

    Birlasoft maintains a robust balance sheet, with cash and cash equivalents increasing to INR2,878.6 crore, up 9% QoQ and 26% YoY. DSO improved to 55 days, reflecting strong cash collections. The company's OCF to EBITDA was healthy at 108%. Management reiterated its commitment to rewarding shareholders and pursuing capability-based M&A, particularly in AI assets, rather than revenue aggregation.

    06

    Sales Team Expansion and Client Strategy

    The company is making significant efforts to expand its sales teams globally, with a substantial increase expected in the coming months⏳. Active client accounts are around 213, following a rationalization process that management states is largely complete. The focus is on growing existing strategic accounts and expanding 'real estate' by acquiring new clients through the enhanced sales force.

    07

    AI Capabilities and Innovation

    Birlasoft is heavily investing in AI capabilities across four strategic dimensions: delivering solutions with Agentic AI tools, enhancing the Birlasoft Cogito AI platform, accelerating talent transformation, and building a Forward Deployed Engineering model. Over a quarter of the code generated is now through agentic AI tools, and the Cogito platform has been demonstrated to over 15 clients, showing business value in accelerated delivery.

    This is an AI-generated summary of a publicly available earnings call transcript.