Buy Birlasoft, target price Rs 310: Anand Rathi

Buy Birlasoft, target price Rs 310:  Anand Rathi

Anand Rathi has buy call on with a target price of Rs 310. The current market price of Birlasoft Ltd. is Rs 256.

Birlasoft Ltd., incorporated in the year 1990, is a Small Cap company (having a market cap of Rs 7096.93 Crore) operating in IT Software sector.

For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 896.36 Crore, up 3.76 % from last quarter Total Income of Rs 863.88 Crore and up 5.32 % from last year same quarter Total Income of Rs 851.09 Crore. Company reported net profit after tax of Rs 96.39 Crore in latest quarter.

Investment Rationale
Birlasoft is likely to deliver 9%, 16%, and 23% CAGRs over FY21-FY23 in dollar revenue, EBITDA and EPS respectively. The stock quotes at 15x FY23e PE, which is considered attractive given expected acceleration and stability ahead. Its target is based on 18x FY23e PE, offering 25% potential. Besides, the brokerage anticipates an increase in the payout ratio to ~50% as the company is sitting on ~$138.3m (or Rs10,108m) cash, 15% of its market cap.

Promoter/FII Holdings
Promoters held 40.7 per cent stake in the company as of Dec 31, 2020, while FIIs held 17.5 per cent, DIIs 16.9 and public and others 24.8 per cent.

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