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earnings | IST

Birlasoft confident of double-digit revenue growth in FY22; expects margins to improve Q3 onwards

It has been a mixed Q1FY22 for Birlasoft. Revenue growth is strong for the third consecutive quarter but margins have slipped 90 basis points (bps) on a quarter-on-quarter (QoQ) basis. The deal win momentum also looks quite patchy. Dharmender Kapoor, CEO and Managing Director at Birlasoft, discussed the earnings fine print.

It has been a mixed Q1FY22 for Birlasoft. Revenue growth is strong for the third consecutive quarter but margins have slipped 90 basis points (bps) on a quarter-on-quarter (QoQ) basis. The deal win momentum also looks quite patchy. Dharmender Kapoor, CEO and Managing Director at Birlasoft, discussed the earnings fine print.
“We have maintained that we will deliver double-digit growth for the full year and we have done better than what we ourselves expected in Q1FY22. So that gives us far more confidence that we will continue to grow very well for the rest of the year as well,” he said.
In terms of margins, he added, “We had given the guidance for margins – to deliver more than 15 percent. So being at 16 percent, we believe we have delivered good margins. However, it is down on a QoQ basis primarily because of the second wave of COVID-19.”
Going forward, he expects to see some pressure on margins in Q2FY22 as well due to wage hikes however he believes that Q3FY22 onwards, it will start improving.
In terms of deal pipeline, he said, “Q4FY21 was a very good quarter for us. on an average for the previous year, it was about USD 200 million per quarter. I believe that we will do the same in this year, also do even better than that because our year’s pipeline is much better than what it was in Q3FY21 and Q4FY21. That gives me the confidence that it will be higher.”
For the full interview, watch the accompanying video.