Birlasoft Q1: Profit Falls 16% To ₹150 Cr | NDTV Profit
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00:00Today we have with us the CFO of Birla Soft, Ms. Kamini Shah.
00:05Welcome to the show and thank you for joining us.
00:08Just a brief about how the numbers were, the Q1 FY25 numbers which the company reported.
00:14The numbers were slightly weak, revenue was down about 3%,
00:18while margins came at 14% versus 14.7% in the previous quarter.
00:24While talking about the constant currency revenue growth, there was a
00:28degrowth of 2%. So what is your take on the results this time, Ms. Shah?
00:35So, I mean, obviously, we are disappointed with the way the Q1 results have come
00:40as a management team. But you must remember that this is at the back of about five quarters of
00:46successive growth that we have seen quarter on quarter. So from our standpoint, yeah,
00:52it has been a disappointing phase. But we have still grown at about 5% year on year.
00:57Our margins, our path has improved about 9% year on year from that standpoint.
01:02And our cash position is obviously very strong, because we closed the quarter with about 1,900
01:07crores of cash that we have on our balance sheet. And I think what is also encouraging in addition
01:13to this is the fact that our TCBDs have been at about 160 million. Almost 60% of that is actually
01:19new business. And it's about 10% year on year. So yeah, in summary, I would say there are misses.
01:26But you know, there are some indicators indicating that, you know, there are things that are looking
01:31back. I probably spend a minute trying to explain the results or you want to follow that after
01:35question. We can do it both ways. You can go ahead, Ms. Shah.
01:40Yeah, so I think, you know, if you really look at it, we are operating in a macroeconomic
01:45situation, which is really tight at this point of time. We've called out that there's been a
01:50tightening of discretionary spends. But I think what really impacted us as far as the current
01:54quarter is concerned, is that we had our teams ready on the ground to execute. There have been,
02:00you know, some delays in terms of ramp ups as from the client standpoint. And that's probably
02:06impacted us from this quarter standpoint. This has largely impacted us in the ERP business and
02:12in the manufacturing space, which is where a lot of work does. Projects normally come to a closure
02:17and projects lamp down. I think we had a situation where there has been a delay between the two of
02:22it. But I am happy to call out that, you know, our infra business has done well in this quarter.
02:27It's a small business for us. We're doing well. This is an area of focus. Our banking financial
02:32services have done extremely well. This has been on multiple quarters of continuous growth. And
02:38we've seen growth on as far as energy and utilities is concerned. So, yeah, I think a big
02:42fact, a lot of work to be done around this area. But, you know, we're seeing some green shoots
02:48standing where we are in quarter two at this point of time. We're hoping that some of the
02:53projects will start wrapping up soon. And we should be hopefully better than what we were
02:58from a Q1 standpoint. So ERP, which was like about 35% of your revenue, actually, that was
03:05the area of weakness. So when do you expect an uptick in this kind of segment? See, like I was
03:12explaining, right, some of our programs came to an end and we had the teams ready, right,
03:17to actually ramp up. If you look at ERP covered by the manufacturing vertical, some of them have
03:23started ramping up at this point of time. I would not say all of it. So, you know, definitely we are
03:30cautiously optimistic, if I may use the term, to see that some of it would come back. Right.
03:34So we are actually in this stage. We're working very closely with our customers because our teams
03:39are anyway deployed on the ground. So, you know, once they are ready to get started, we would be
03:43in a position to start moving on the work. Right, right. Okay, let's move on to the BFSI segment,
03:50which has been the most important vertical for most of the IT services companies as well. So
03:55that has been a really good growth around BFSI for BuildOurSoft over here. So do you expect
04:01green shoots over here is what you had mentioned. But in the call yesterday, you had mentioned about
04:07BFSI growth likely to moderate in the coming quarter. So what is your take on the BFSI
04:12going forward in the second half of FY25? I think BFSI will continue to be a growth engine for us
04:19to this extent that we have seen it grow continuously quarter on quarter. I think what
04:24we said last in our call yesterday is that, you know, it grew by 8% this quarter. I don't think
04:30we can expect it to grow at that level. It would probably moderate a little bit from that
04:36standpoint. But from a year on year basis, definitely BFSI will grow for us. Right. So
04:41that's definitely an area we're focusing a lot, investing a lot, and you're doing a lot of
04:46account mining and, you know, working towards deals. So I would probably, the green shoots that
04:52I mentioned about, right, is largely to the fact that this is more in terms of the manufacturing
04:57and the ERP combination that you saw where, you know, we had a degrowth largely in quarter one.
05:04And we are saying we started seeing green shoots in this area. Right. One last question from my
05:10end as we run short out of time. The EBIT margin came in at about 14%, which is largely, you know,
05:17at the lower band of the guided range of 14 to 15%. So why do you expect to come back to this
05:23kind of band? Because, you know, wage hikes are lined up. Even subcontracting cost was
05:28almost bottoming out this quarter. So what kind of margin levers do you expect to achieve this
05:33kind of band going ahead? I think I'll probably reiterate, right. See, we are an operating
05:38leverage business to a large extent. So, you know, to some extent, I think our revenues have to get
05:42back up to track. We have to be able to deploy and use our people effectively in the businesses
05:48that we do. So I would expect in the near term, we would probably be in this range. But, you know,
05:54and then try to move in from there. I think our focus right now is to make sure that the business
05:58get back on growth and that's going to be our priority for quarter two. So we want to execute
06:03quarter two well and then we will take in quarter three, quarter four from there.