Debasis Mohapatra
Bengaluru, 7 August 2024
Mid-tier IT firm, Birlasoft has already started witnessing recovery in its ERP business starting from July and is confident of better growth in its manufacturing vertical on the back of such recovery.
In the first quarter of FY25, the mid-tier IT services firm saw a sequential decline in its ERP business, relating to its manufacturing vertical. The manufacturing vertical is the biggest revenue-contributing block of the company. It contributed 39.2% of its total revenue during the Q1 of FY25.
“There was a Q-o-Q (quarter on quarter) decline in the ERP business and therefore, in the manufacturing vertical, where much of our ERP business actually comes from. We have teams ready to engage on the projects that got deferred. And the cost associated with that, combined with the lack of corresponding revenues, led to the decline of our margins quarter-on-quarter. But the good news is at the end of July, some of the programmes which have got delayed beyond Q1, have already started coming back. So, with that, we expect a recovery in Q2 and hope to deliver a stronger Q2,” Angan Guha, CEO of Birlasoft said during the post-earnings analyst call.
The company also expects its healthcare vertical to perform better in the first quarter. “We expect our Life Sciences businesses to revert back to growth mode in the second half of the year with a modest growth likely in Q2 itself,” Kamini Shah, CFO of Birlasoft said during the analyst call.
Birlasoft reported Q1 revenue of $159.1 million, which was a decline of 2.7% on a quarter-on-quarter basis in constant currency terms.
“The operating environment that remains quite challenging, the content discretionary spend by our customers and some delay of projects that was expected to start in Q1, which has got delayed beyond Q1 and expansion of our footprint in areas where we have so far not effectively tapped,” Guha has said as the reasons for the sequential revenue growth decline.
However, the company is confident of better Q2 performance as project ramp-ups improves.
