BSOFT - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 How I’m Thinking About This

You’re asking for a full-spectrum fundamental analysis of Birlasoft Ltd (BSOFT), a mid-cap IT services firm focused on digital transformation. I’m evaluating its financial strength, valuation metrics, business model, and technical indicators to determine its long-term investment potential and ideal entry point.

📊 Core Financials Breakdown

Profitability & Growth

EPS: ₹8.18 — modest earnings base

PAT Qtr: ₹36.7 Cr vs ₹80.3 Cr — -66.1% QoQ, sharp decline

ROE: 18.6%, ROCE: 23.5% — strong capital efficiency

Debt-to-equity: 0.07 — low leverage, healthy balance sheet

Dividend & Cash Flow

Dividend Yield: 1.67% — decent payout for mid-cap IT

Cash flows are stable, but recent profit contraction raises caution

💰 Valuation Indicators

Metric Value Interpretation

P/E Ratio 47.7 Overvalued vs industry PE of 30.0

P/B Ratio ~6.57 Premium to book value

PEG Ratio -154 Negative — reflects earnings contraction

Intrinsic Value ~₹360–₹375 Slightly overvalued at current price

Valuation is stretched due to recent earnings volatility, making PEG and P/E less reliable.

💼 Business Model & Competitive Edge

Industry: IT services — scalable, margin-sensitive

Moat: Niche focus in ERP, cloud, and digital transformation for manufacturing and BFSI

Challenges

Margin pressure and broad-based revenue decline

DII holdings down (-2.11%) — cautious domestic sentiment

FII holdings up (+0.70%) — some foreign confidence remains

Despite strong ROE and ROCE, the recent earnings dip and valuation premium suggest caution.

📉 Technical & Entry Zone

Current Price: ₹389

DMA 50/200: Trading below 200 DMA — bearish undertone

MACD: -1.65 — mild negative momentum

RSI: 56.9 — neutral zone

📌 Suggested Entry Zone: ₹360–₹375

This range offers a better margin of safety and aligns with intrinsic value and technical support.

🕰️ Long-Term Holding Guidance

Hold if already invested, but monitor quarterly results closely

Buy on dips near ₹370 if bullish on mid-cap IT recovery

2026 Target Price: ₹467.50 based on consensus analyst estimates

1

2025 Forecast Range: ₹273–₹706 depending on execution and sector tailwinds

2

⭐ Fundamental Rating

3.7

1

trendlyne.com

2

shareprice-target.com

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