Nomura has downgraded Birlasoft Ltd. to 'Neutral' from its earlier rating of 'Buy' and reduced its price target to ₹380 per share from ₹390 earlier, citing weak revenue growth and limited near-term earnings visibility. According to reports from CNBC TV18, the brokerage cited weak Q4FY26 revenue performance amid client-specific issues and a challenging demand environment shaped by macro uncertainty, trade tensions, tariffs and geopolitical risks. Birlasoft shares ended 0.7% higher at ₹372.50 on Wednesday, though the stock remains down 14% so far this year. The downgrade reflects concerns about the company's ability to translate its sales organization revamp and large account engagement efforts into meaningful growth.
For Q4FY26, constant currency revenue declined 3.7% sequentially and 5.1% year-on-year, as reported by CNBC TV18. Despite the weak topline, EBITDA margin improved for the third straight quarter to 18.5% from 18.2%, aided partly by one-off gains and foreign exchange benefits. Profit after tax rose 47% sequentially, supported by lower tax expenses and the absence of labour code-related costs that had impacted the previous quarter. Geographically, revenue from the US market declined 4.4% quarter-on-quarter in dollar terms, while the Rest of the World segment remained largely flat. The sluggish deal wins over FY25 and FY26 have amplified the impact of weak demand on revenue growth.
According to CNBC TV18, the offshore revenue mix improved further to 57.5%, while the fixed-price project mix declined 150 basis points sequentially. Client metrics remained soft, with the top five clients remaining flat, while revenue from the top 10 and top 20 clients declined 1.9% and 2.5% respectively on a sequential basis. Headcount fell 2.4% quarter-on-quarter, while utilisation declined 70 basis points to 81.5% and attrition eased marginally to 13%. Management remains focused on improving deal wins and strengthening the pipeline to ensure FY27 returns to a growth trajectory.
As reported by CNBC TV18, Nomura has lowered its dollar revenue estimates by 5-7% for FY27 and FY28 and now expects growth in the range of -0.8% to 3.5% over the two years. The brokerage believes the company's efforts to revamp its sales organisation and deepen engagement with large accounts may take time to translate into meaningful growth. With a book-to-bill ratio of 1.43x, timely closure of large deals in Q1FY27 will be critical for improving the company's growth outlook. The company's focus on improving deal wins and strengthening the pipeline is crucial for returning to a growth trajectory in FY27.
