Birlasoft Limited (ISIN: INE836A01035) has released its financial results for the second quarter of fiscal year 2026, showcasing a mixed performance with significant margin improvement despite revenue challenges.

Key Financial Highlights

• Revenue: $150.70 million, a marginal 0.1% quarter-on-quarter growth
• EBITDA: $24.20 million, up 29.9% quarter-on-quarter
• EBITDA Margin: Expanded to 16.00% from 12.40% in Q1 FY26
• Total Contract Value (TCV) of deals signed: $107.00 million

Revenue and Profitability

Birlasoft reported a modest revenue growth of 0.1% quarter-on-quarter, reaching $150.70 million in Q2 FY26. In rupee terms, the revenue stood at Rs. 13,289.00 million, representing a 3.4% sequential growth. The company's EBITDA saw a substantial improvement, increasing by 29.9% quarter-on-quarter to $24.20 million.

The EBITDA margin expanded significantly from 12.40% in Q1 to 16.00% in Q2, driven by operational efficiencies, rationalization of low-profitability accounts, and some one-time benefits. Adjusting for one-offs and exchange rate gains, the steady-state EBITDA margin would be around 13.50%.

Sector Performance

• BFSI and Life Sciences & Services (LSS) verticals showed sequential growth
• Manufacturing vertical experienced weakness
• ERP business faced challenges, with revenue declining from previous quarters

Deal Wins and Future Outlook

Birlasoft reported a Total Contract Value (TCV) of $107.00 million in Q2 FY26. The company expects sequential revenue growth in both Q3 and Q4 of FY26, despite Q3 typically being a seasonally weak quarter due to furloughs.

Angan Guha, CEO and Managing Director of Birlasoft, stated, "We have delivered a healthy operating quarter with a strong margin performance. We expect that there will be sequential growth in the remaining two quarters of the year, as in Q3 and Q4."

Strategic Initiatives

The company is focusing on:

1. Building a strong deal pipeline
2. Transitioning from staff augmentation to outcome-based engagements
3. Leveraging advanced AI-led capabilities, including Agentic AI
4. Improving operational efficiencies and rationalizing low-profitability accounts

Management Commentary

Chandrasekar Thyagarajan, Chief Financial Officer, commented on the margin improvement: "The robust margin expansion was led by a combination of factors including better operational efficiency, some rationalization of low profitability tail accounts resulting in better average margin, exchange rate tailwinds, as well as some one-offs."

Conclusion

While Birlasoft faces revenue growth challenges, particularly in its Manufacturing and ERP segments, the company has demonstrated strong margin improvement through operational efficiencies and strategic initiatives. The management remains confident about sequential growth in the coming quarters and is focused on building a robust deal pipeline to drive future growth.

Investors and analysts will be closely watching Birlasoft's performance in the second half of FY26, particularly its ability to convert its deal pipeline into revenue growth while maintaining the improved margin levels.

Birlasoft Limited (BSE: 532400, NSE: BSOFT), a part of the CK Birla Group, has announced its financial results for the second quarter ending September 30. The company reported a mixed performance and shared optimistic expectations for the second half of the fiscal year.

Financial Highlights

• Revenue: ₹13,289.03 million, up 3.4% quarter-on-quarter (QoQ)
• EBITDA: ₹2,133.00 million, with EBITDA margin expanding to 16.0% from 12.4% in Q1
• Profit After Tax (PAT): ₹1,161.02 million
• Earnings Per Share (EPS): ₹4.16 (basic, not annualized)

Segment Performance

The Life Sciences & Services vertical showed the strongest growth, while Manufacturing experienced a slight decline.

Management Commentary

Mr. Angan Guha, Chief Executive Officer and Managing Director of Birlasoft, commented on the results: "We have delivered a healthy operating quarter in the face of a macro-environment that remains challenging. Our performance during the quarter under review also reflects our ability to drive operational efficiencies and generate strong cash flows."

He added, "We continue to make investments aimed at enhancing our capabilities and are leveraging advanced AI-led capabilities, including Agentic AI, across multiple engagements. Our pipeline remains robust and we expect an upswing in deal wins as customer decision-making picks up."

Future Outlook

Birlasoft expects revenue growth for Q3 and Q4, aiming for stronger performance in the second half compared to the first half of the fiscal year. This positive outlook is supported by the company's robust deal pipeline and anticipated improvement in customer decision-making processes.

Other Developments

• The Board of Directors declared an interim dividend of ₹2.50 per equity share.
• Birlasoft granted 250,000 options under its Share Incentive Plan-2019 and 62,500 Restricted Stock Units (RSUs) along with 87,500 Performance Stock Units (PSUs) under its Share Incentive Plan-2022 to eligible employees.

Cash Position and Deal Wins

• Cash and cash equivalents increased to ₹23,434.00 million, up 2.5% QoQ and 26.1% year-over-year.
• The company signed deals with a Total Contract Value (TCV) of $107 million during the quarter, including new deal wins of $40 million.

Birlasoft continues to focus on operational efficiency, cash flow generation, and prudent capital allocation as it navigates the current market conditions and prepares for anticipated growth in the latter half of the fiscal year.