Birlasoft Ltd — Q4 FY26 earnings call

Call held 6 May 2026

Management summary

Birlasoft reported a challenging Q4 FY26 with sequential revenue decline in dollar terms due to macroeconomic headwinds, client-specific issues, and strategic exits from non-profitable revenue streams. Despite revenue pressures, the company achieved significant margin expansion, with Q4 EBITDA reaching 18.5% and FY26 EBITDA at 16.3%. Deal wins remained strong at $208 million TCV, and the company is investing heavily in AI capabilities, sales force expansion, and new leadership to drive future growth.

Highlights

  • Q4 FY26 EBITDA margin expanded to 18.5%, a 30 bps QoQ expansion.

  • FY26 EBITDA margin expanded 333 bps YoY to 16.3%.

  • Q4 PAT rose 46.7% QoQ to INR 1,759 million.

  • Signed $208 million TCV in Q4 FY26, which is 3% higher than Q3 FY26.

  • Cash and cash equivalents increased 19% YoY to INR 2,637.3 crore.

Concerns

  • Q4 FY26 revenue declined sequentially in dollar terms to $145.3 million.

  • FY26 revenue was down 1.2% in rupee terms to INR 53,100 million.

  • DSO increased sequentially to 62 days.

Key financials

4 periods

Q4 FY26

  • Revenue
    13,486 Mn
    YoY +2.4% QoQ +0.1%
  • EBITDA Margin
    18.5%
  • PAT
    1,759 Mn
    QoQ +46.7%

Q4 FY26 USD

  • Revenue
    145.3 Mn
    QoQ -3.7%

FY26

  • Revenue
    53,100 Mn
    YoY -1.2%
  • EBITDA Margin
    16.3%
  • Adjusted PAT
    6,595 Mn
    YoY +27.6%
  • Adjusted Basic EPS
    ₹22.14

FY26 USD

  • Revenue
    597.5 Mn
    YoY -6%

What they filed

Q1 FY27: revenue up 7.3%, net profit up 51.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,368 1,363 1,317 1,285 1,329 −3%1,348 −1%1,349 +2%1,379 +7%
EBITDA165 163 174 159 213 +29%245 +50%249 +43%223 +40%
Net profit128 117 122 106 116 −9%120 +3%176 +44%161 +52%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Energy & Utilities
    1.8% Sequential Growth (Q4 FY26)

Order book

high confidence

Total value

$208 Mn

as of 2026-03-31 quantified

3% QoQ

Inflow this quarter

$208 Mn

Pipeline

deal pipeline tcv

Pipeline will improve with increased sellers and focus on order booking.

Cancellations & deferrals

  • deferred: Clients delaying decision-making, deals pushed to Q1 FY27.
The company registered order booking above the $200 million mark for the second consecutive quarter.

Source: Prepared remarks

Capital allocation

high confidence
  • Dividend ₹4/share (final)
    the Board of Directors has proposed a final dividend of INR 4 per share, subject to shareholders' approval. This, combined with the interim dividend paid out after our Q2 Board meeting, takes our overall dividend for the full financial year to INR 6.50 per share.
  • Liquidity Cash ₹2,637.3 Cr Cash and cash equivalents increased 19% year-on-year.
    We ended the year with cash and cash equivalents of INR 2,637.3 crore, up 19% year-on-year.

Guidance & targets

Headcount

  • Sales team strength increase Headcount · by mid-FY27 · High confidence 30% to 40%
    By the middle of FY '27, I reckon that our sales team strength would have gone up by 30% to 40% on a year-on-year basis.

    — Angan Guha

Margin

  • Steady-state EBITDA margin Margin · consistent basis · High confidence 15%
    our steady-state EBITDA margin performance for us would be in the 15% range, right?

    — Chandrasekar T.

Tax Rate

  • Effective Tax Rate (ETR) Tax Rate · starting FY'27 · High confidence closer to historical level
    expect ETR to settle closer to our historical ETR level starting FY'27.

    — Chandrasekar T.

Order Booking

  • Order booking performance Order Booking · future · Medium confidence substantially better than FY26
    I would not like to give the exact number, but it will definitely be substantially better than the order book we delivered in FY26.

    — Angan Guha

What to watch in Q1 FY27

Sales team strength increase

by mid-FY27
Current Significant investments in sales team
Target 30% to 40% YoY increase

Why it matters

A key investment to drive future revenue growth and pipeline generation, indicating the effectiveness of the growth strategy.

By the middle of FY '27, I reckon that our sales team strength would have gone up by 30% to 40% on a year-on-year basis.

Risks & concerns

  • Soft demand environment and macroeconomic headwinds

    high

    Sustained macroeconomic headwinds, trade, tariffs, and geopolitics made the demand environment challenging and volatile, impacting FY26 revenue.

    Management acknowledged

  • Market uncertainty and volatility

    high

    The market is very uncertain and volatile, making it difficult for the company to provide forward guidance.

    Management acknowledged

  • Client-specific operational issues

    medium

    An operational issue at one MedTech customer affected Q4 volume growth, but management believes it is now behind them.

    Management acknowledged

  • Revenue deflation from AI deals

    medium

    AI deals require upfront productivity benefits, leading to revenue deflation in the immediate and medium term, though revenue is expected to catch up later.

    Management acknowledged

  • Execution risk in outcome-based/fixed-price AI deals

    medium

    While outcome-based deals offer upside, poor execution can lead to lower profitability.

    Analyst acknowledged

Q&A highlights

6 direct
FY27 Growth Outlook Partial
we do not give out guidance. But if you look at the investments that we have made... we are hoping that the bad news is behind us now and FY'27 will be better for us.

Analyst pushed for specific FY27 growth guidance, but management declined due to market volatility, focusing instead on input parameters and investments.

Asked by Girish Pai

ERP Business Performance & AI Impact Direct
first of all, our ERP business has been very challenged irrespective of Palantir's announcement or the AI-related stories. We've consistently not performed on our ERP business. Now the good news is, I think finally we've been able to get a leader to lead our ERP business.

Addressed underperformance in a key vertical and highlighted a new leadership hire as a turnaround strategy.

Asked by Girish Pai

Client-Specific Operational Issue & TCV Softness Direct
It is Life Sciences. And within Life Sciences, it is the MedTech sector, medical devices sector... I intuitively feel that the bad news in both manufacturing and med devices sector is behind us.

Identified the specific vertical (MedTech within Life Sciences) impacted by operational issues and provided reassurance that the issue is now behind them.

Asked by Sudheer Guntupalli

Margin Sustainability & Impact of Investments Direct
our steady state margins that we should expect is going to be upward of 15% and there will be an erosion from where we are today, obviously, because of these investments.

Clarified the expected margin trajectory, acknowledging that current high margins would see some erosion due to necessary growth investments, but aiming for a sustainable 15%+ level.

Asked by Sudheer Guntupalli

Effectiveness of Restructuring & Sales Ramp-up Direct
the leaders that we had hired earlier have not delivered. And we had to make changes at multiple levels. So from that perspective, the reason why I'm now well, let me not even say from a confidence perspective, but the one thing that I can tell you is the following that we have invested for growth.

Acknowledged past failures in leadership hires and explained the renewed confidence in current investments in talent and sales force expansion.

Asked by Sandeep Shah

Cash Utilization & Shareholder Returns Partial
the cash in the balance sheet, you're right that it rightfully belongs to the shareholders, and this is a call that the Board is taking on behalf of the shareholders and recommending to the shareholders.

Analyst questioned the accumulation of cash without clear returns to shareholders, and management deferred to the Board's decision.

Asked by Priyank Chheda

BFSI Spending Shift & AI Impact Direct
the spending is continuing to be stable, but the spending is shifting from more traditional businesses to more AI-related work... we are participating in that and winning our share of the business.

Provided insight into the evolving nature of client spending in BFSI, indicating a shift towards AI-driven projects rather than an overall increase in spending.

Asked by Gaurav Nigam

Q4 Margin One-offs Quantification Direct
the forex tailwind gave us a 170-basis point benefit. And the other items that I talked about gave us another 170 points benefit. So it's about a 340-point benefit that we got in the fourth quarter.

Provided specific quantification of the one-off benefits that contributed to the elevated Q4 margins, clarifying their non-recurring nature.

Asked by Pulkit Chawla

3 min read 7 chapters

Detailed narrative

Q4 FY26 Performance Amidst Macroeconomic Headwinds

Birlasoft reported a challenging Q4 FY26, with revenues growing only 0.1% QoQ and 2.4% YoY in rupee terms to INR 13,486 million. In dollar terms, revenue declined sequentially to $145.3 million, a 3.7% QoQ drop in constant currency. The full year FY26 revenue stood at INR 53,100 million, down 1.2% in rupee terms, attributed to a soft demand environment, client-specific issues, and strategic exits from non-profitable revenue streams that impacted growth by approximately 200 basis points.

Significant Margin Expansion Driven by Operational Efficiencies

Despite revenue pressures, Birlasoft achieved robust margin expansion. The EBITDA margin for Q4 FY26 increased to 18.5%, marking a 30 basis points QoQ expansion. For the full year FY26, EBITDA margins expanded by 333 basis points YoY to 16.3%. This improvement was a result of decisive actions to enhance revenue quality, optimize cost structures, and benefited from one-off items and currency tailwinds totaling 340 basis points in Q4.

Strong Deal Wins and AI-First Strategic Pivot

The company demonstrated strong order booking, signing $208 million in Total Contract Value (TCV) in Q4 FY26, which was 3% higher than Q3 FY26 and marked the second consecutive quarter above the $200 million mark. Birlasoft is actively pursuing an 'AI First' strategy, deploying AI-powered solutions like its Cogito platform in new engagements, including a multi-horizon AI and data modernization program for a Fortune 500 MedTech customer and scaling Gen AI services in the North American P&C market.

Investments in Leadership and Sales Force Expansion

Birlasoft is making significant investments to strengthen its growth engine. This includes onboarding new leaders for key areas such as Data & AI, ERP, Global Partnerships, and the Lifesciences vertical, with a new COO also joining. The company plans to increase its sales team strength by 30-40% year-on-year by mid-FY27, aiming to generate more pipeline and order bookings, particularly for outcome-based and managed services engagements.

Vertical Performance and Client Dynamics

In Q4 FY26, the Energy & Utilities (E&U) vertical registered a sequential growth of 1.8%, while other verticals experienced degrowth. A specific operational issue within the MedTech sector (Life Sciences) impacted volume growth, but management indicated this issue is now resolved. In the BFSI vertical, spending remains stable but is shifting from traditional services to AI-related work, with Birlasoft actively participating in this transition.

Shareholder Returns and Robust Liquidity Position

The Board of Directors proposed a final dividend of INR 4 per share, bringing the total dividend for FY26 to INR 6.50 per share, reflecting a commitment to shareholder returns. The company maintains a robust balance sheet, with cash and cash equivalents increasing 19% YoY to INR 2,637.3 crore. This strong liquidity position supports continued investments in AI capabilities and talent to fuel future growth.

Outlook on Sustainable Margins and Tax Rate

Management guided that while Q4 margins benefited from one-off items, the sustainable steady-state EBITDA margin is expected to be upward of 15%. They anticipate some margin erosion in the near term due to necessary growth investments and front-ending of productivity benefits from AI deals. The Effective Tax Rate (ETR), which was elevated in FY26 due to incremental U.S. federal tax, is expected to normalize closer to historical levels starting FY27.

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