Birlasoft Ltd (BSOFT) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Q2 FY27 earnings conference call of Birlasoft Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Abhinandan Singh, Head Investor Relations, Birlasoft. Thank you and over to you, Mr. Singh.
Abhinandan Singh (Birlasoft Limited): Welcome folks. By now you'd have received or seen our results that were announced earlier today. Those are also available in our website, www.birlasoft.com. Joining me on this call this evening are our CEO and MD, Mr. Angan Guha and our Chief Financial Officer, Mr. Chandrasekar Thyagarajan or Chandru as we call him. We will begin the call today as usual with the opening remarks from both Angan and Chandru. But before I hand over the floor to Angan, a quick reminder that anything that we say on this call on the company's outlook for the future could be a forward-looking statement involving significant uncertainty, and therefore that must be heard or read in conjunction with the disclaimer that appears in our investor update, which you'd have received and is also uploaded on our website as well as filed with the stock exchanges. With that, let me hand over the floor now to Mr. Angan Guha, our CEO and MD. Over to you, Angan.
Angan Guha (Birlasoft Limited): Yeah. Thank you, Abhi. Good morning and good evening to all of you wherever you are, and thanks for joining us today as we share
Angan Guha (Birlasoft Limited): second quarter of the current fiscal. As you would have already noticed, we've delivered a revenue growth of 2.1% in both constant currency and dollar terms quarter-over-quarter. In rupee terms, revenue during the quarter grew by 2.7% sequentially. I'm also pleased to note that the Life Sciences amongst our verticals and the &D business amongst our service lines, both have registered their second consecutive quarter of sequential growth in Q2. Manufacturing business as well as the BFSI business also witnessed sequential growth. The ENU vertical continue to remain soft due to a particular ran down of work in one client. Our EBIT margin for the quarter considers the fact that the organization-wide compensation revision that came into effect from July 2026, but remains within the range that Chandru, our CFO, had called out in the last quarter. We have also seen robust cash flows, collections as well as our cash balances and the DSOs have improved. Chandru will provide more colour on this in his remarks. Deal signings during the quarter came in at 116.1 million TCV, up 9% year-on-year, and for the first half, at 285 million, which is an uptick of 15% year-on-year. Our deal wins during the quarter include several AI led engagements. To just name a few, we've secured a strategic AI-led transformation opportunity involving large scale platform modernization, cloud adoption, and business transformation from a leading European logistics organization. This engagement showcases Birlasoft's AI-driven delivery life cycle, AIDLC approach, combining architectural excellence, AI-assisted engineering automated testing, acceleration migration, and disciplined program execution to modernize a mission-critical platform at scale. Similarly, for a global industrial manufacturer, we have won a three-year AI-led managed services engagement to support their ERP systems and drive business innovation. Similarly again, we've been selected by one of the largest medical devices manufacturers in North America to provide a range of services from program governance, AI and data COE, and core digital transformation. This strengthens the company's long-term relationship with the client as a provider of core transformation services to their IT organization. As I had previously pointed out, we now have a growing base of engagements where we are deploying advanced AI-powered capabilities. We continue to make these investments both in our technology as well as in our domain areas. During Q2, the quarter that just went by, Birlasoft earned the AWS AI Services Competency status, which recognizes our ability to deliver GenAI, Agentic AI solutions on the AWS platform at production scale. AWS awarded the competency after reviewing several live client programs, covering Agentic AI and AI-led modernization of legacy applications, intelligent document processing and govern analytics. This makes Birlasoft an AWS validated AI partner and this is already help us helping us win many more clients and businesses. The new multi-year AI engagement with the global logistics company that I mentioned earlier, was secured on the strength of this competency. Birlasoft is now an OpenAI Select partner. This will enable us to continue working with OpenAI to help enterprises build, deploy, and scale AI solutions responsibly and effectively. Our core enterprise Agentic AI platform, Cogito, our AI-powered test engineering platform, Linux, and our Agentic
Angan Guha (Birlasoft Limited): GenAI platform sigma to get the drive a differentiated AI lead offering. Around the third of our code today, up from almost 25% a few months ago, is now generated using agentic AI tools. We have reimagined engineering work flows for 20 plus of our top services offerings with an AI-first approach. At the same time, human in the loop controls remain in place for security, governance, quality and reliability. We continue to embed AI across our service offerings, reimagining engineering work flows and equip our people to work on agentic AI through our AI development life cycle. In terms of the outlook, with the demand environment remaining unchanged and the H2 of our current financial year is expected to reflect some furloughs in 3Q, we still remain committed to investing in our tech capabilities and our sales organization. Given the pipeline ongoing conversations and seasonal uptick in renewals we are well positioned to drive better financial performance in H2 FY27. At this point I will ask Chandru to share his perspective on the quarter under review. Chandru.
Chandrasekar Thyagarajan (Birlasoft Limited): Thank you, Angan. And a very warm welcome to all of you joining us today on this call. Let me take you through some of the financial highlights for Q2 FY27. Our consolidated revenue for the quarter stood at $143.148.3 million which had strength a quarter-on-quarter growth of 2.1%. In rupee terms, the revenue for Q2 FY27 was Rs 1,416.2 crores, a sequential growth of 2.7%. Growth during the quarter was led by manufacturing, BFSI and our life sciences and services verticals which grew quarter-on-quarter by 5.2%, 3.6% and 2.1% respectively. As Angan noted in his remarks, the ENU vertical, which has historically been a steady growth engine for us, saw some softness due to a ramp down of work for a customer in Europe. While we do not expect any further downside on that front, we do not see a bounce back in the short term either. Among service lines, Digital and Data grew by 3.4% quarter-on-quarter and ERP grew 2.9% quarter-on-quarter. The Infra service line was affected by the drop in revenue in our ENU vertical, as mentioned earlier. As you may recall, an organization wide compensation increase was rolled out effective July 2026. Considering that and the ongoing investments we are making in our business, our EBITDA performance has been strong with EBITDA for the quarter under review at Rs 2,153 million or 215.3 crores, $22.5 million in dollar terms. Consequently, EBITDA margin for Q2 was 15.2%. This is within the range we had indicated earlier. This robust margin performance was enabled by a combination of factors, including continued focus on operational efficiencies, productivity improvements, and better quality of revenue. These have helped to partly offset the headwinds from higher wage costs. Our PAT stood at Rs 159.6 crores, which is $16.7 million. Our effective tax rate for the quarter stood at 29%. Coming to some key balance sheet items. We have maintained our robust track record on collections, and our cash flow generations has been good during this quarter too. Collection during the quarter was $164 million, resulting in our DSO touching a two-year best of 51 days. Our cash and cash equivalent
Chandrasekar Thyagarajan (Birlasoft Limited): I will now open the floor for questions.
Moderator: Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question, may please press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants to ask a question, please press star and one on a touch tone telephone. First question is from the line of Sandeep Shah from Equirus Securities. Please go ahead.
Sandeep Shah (Equirus Securities): Yeah. Thanks for the opportunity and congrats on a good execution. Just one question in terms of earlier quarters we have highlighted to exit from some of the low margin businesses. So, where are we in that context? And second, is it fair to assume our annuity business could have increased materially versus what it was a year back. So, if you can give some clarity on the same, will help.
Angan Guha (Birlasoft Limited): Yeah. So, Sandeep, thank you for your question. So, look our annuity business is obviously going up, but more importantly, our quality of revenue is really going up. So, from that perspective, I think the team has done a good job on executing in terms of getting in higher quality of revenue, and that is reflective in some of the financial parameters that Chandru spoke about earlier. Now, as far as getting out of negative accounts, I think that job is done and over. It's done and dusted. And as And now like I had said, Sandeep, even in the last call, the entire focus is to really drive sales, drive pipeline, and drive drive order book. So, we've kind of cleaned up our balance sheet significantly. So, that part is now done and dusted.
Sandeep Shah (Equirus Securities): Okay. And when you say better 2H versus 1H, are you implying Q3, Q4 constant currency sequential growth could be better or in line with 2Q?
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