Foreign institutional investors (FIIs) have dramatically accelerated their selling of Indian IT stocks during Q4FY26, with ₹20,000 crore worth of IT stocks sold during the January-March quarter. According to reports from The Financial Express, this represents a significant increase from ₹6,862 crore in the previous quarter, as FIIs dumped IT stocks at an unusually fast pace amid escalating West Asia turmoil. The Nifty IT Index has declined 26.3% in the past year, reflecting the sector's challenges from poor earnings growth, muted demand, and regulatory pressures including H-1B visa rule changes in the US.
Despite the broader IT sector selloff, FIIs aggressively bought Birlasoft Limited, raising their stake by 2.73% points during Q4FY26 to reach a total holding of 13.64% at quarter-end. As reported by The Financial Express, this contrasts sharply with their selling behavior across other IT stocks, with Birlasoft not being the traditional favorites like TCS or Infosys. The company is part of the CK Birla Group and focuses on IT services across manufacturing, BFSI, life sciences, and energy sectors, with over 85% of revenue from US clients.
Birlasoft delivered impressive Q4FY26 results with profits surging 44% year-on-year to ₹176 crore from ₹122 crore in Q4FY25, despite sales growing only 2.4% to ₹1,349 crore. According to The Financial Express, the company won deals worth $208 million total contract value (TCV), up 3% quarter-on-quarter from $202 million in Q3FY26. The EBITDA margin expanded to 18.5% for the third consecutive quarter, improving from 18.2% in Q3FY26 and 13.2% in Q4FY25. Management attributed the profit growth to excellent operating efficiency and exchange rate tailwinds.
Birlasoft's stock appears attractively valued compared to industry peers, trading at a price-earnings ratio of 17.2x, below the industry median of 20.6x. As reported by The Financial Express, the price-to-book value ratio stands at 2.3x, lower than the industry median of 3.6x. The company maintains a debt-equity ratio of just 0.03x, making it almost debt-free, while offering a dividend yield of 1.94% with a return on equity of 14.35%.
The company's revenue concentration is increasing with top five clients contributing 42.2% of revenue in Q4FY26, up from 37.1% in Q4FY25, while top ten clients account for 55.2% compared to 52% previously. However, the total number of active clients declined from 254 to 221 year-on-year. According to The Financial Express, FIIs' selective buying of Birlasoft amid the broader IT sector selloff suggests confidence in the company's operational efficiency and future potential, despite the sector-wide challenges facing the Indian IT industry.
