Birlasoft shares tank 9% ahead of Q3 results, what is spooking this Ashish Dhawan stock?

Birlasoft's shares tanked more than 9 per cent during trading session on Thursday ahead of its Q3 results and the stock was marginally shy of its 52-week low during the session. The street is expecting a mixed set of numbers from the company.

Birlasoft, the smallcap IT firm, may report a double-digit growth in year-on-year (YoY) sales. Profit may rise in single digit, analysts said. On a quarter-on-quarter (QoQ) basis, the company is likely to report flattish performance.

Shares of Birlasoft dropped over 9 per cent to Rs 268.20 on Thursday, inching closer to 52-week low at Rs 262.30, before making a marginally recovery. However, the counter had settled at Rs 296.05 on Wednesday.

Birlasoft's shares are down 10 per cent in the last month, whereas the stock has plunged 20 per cent in the last six months. The stock has almost halved from its 52-week high at Rs 501.65, hit in April 2022.

Emkay Global anticipates Birlasoft to report 0.8 per cent sequential growth in dollar revenue after considering 10 bps cross-currency headwind. EBIT margin is seen improving 40 bps QoQ due to operational efficiencies and weak rupee.

Overall, the broking firm sees a 9.7 per cent YoY (8.6 per cent QoQ) rise in profit at Rs 125 crore on a 15.1 per cent YoY (3.5 per cent QoQ) jump in sales at Rs 1,234 crore.  Ebitda margin is seen coming in at 15.2 per cent against 14.8 per cent in September and 15.2 per cent in the year-ago quarter.

Nuvama Research pegs revenue for Birlasoft at Rs 1,225.40 crore, up 14.30 per cent YoY. Net profit is seen rising 4 per cent to Rs 118.7 crore. EBIT is seen at Rs 148.30 crore with EBIT margins are expected to contract 133 bps.

"Life science vertical is expected to remain a drag and margin is likely to decline due to wage hikes and travel costs," it added. "We would keenly watch out for management commentary on hyperscalers partnerships and updates on management change."

Seasoned investor Ashish Dhawan stayed put in the company as he continued to held 27,64,615 shares, or 1.01 per cent stake, in the smallcap IT player as of December 2022 quarter.

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