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Birlasoft Hits All-Time High, Yields 196% Return in 10+ Months!

Birlasoft Hits All-Time High, Yields 196% Return in 10+ Months!
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Chart: Birlasoft All Time High & 52 Week Low as of 22 Dec 2023

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Birlasoft hit its 52 week low of ₹250.25 on 03 Feb 2023 and from there it move to ₹746.00 creating a brand-new All Time High on 22 Dec 2023, giving a whopping 196.18% return in just 10 months and 19 days.

If you had invested ₹10,000 at its 52-week low price, your investment would have grown to ₹29,618 by 22 Dec 2023. This represents a gain of ₹19,618 in just 10 months and 19 days. Given BSOFT's strong recent performance, Lets find out what opportunities lies ahead for BSOFT

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Birlasoft’s Record Surge to a New All-Time High

The all-time high of Birlasoft can be a result of many factors. Its previous all-time high was made on 20 December 2023 at ₹ 739.4. It took 02 days to create a new all-time high at ₹ 746 on 22 December 2023. In between, it made a low of ₹ 692.95 on 21 December 2023, implying a correction of over 6%. It may represent a change in the investors’ sentiment about the company due to improved financial condition or may represent overvaluation. Let’s go through the factors contributing to its all-time high.

Factors Contributing to a Stock’s All-Time High

Positive Earnings Reports

  • If we consider the revenue of the last 7 quarters, it has continuously increased quarter-on-quarter. In Q2 FY24, its revenue increased by 9.88% YOY and reached ₹ 1310 crores.
  • Its net income has continuously increased in the last 3 quarters. In Q3 FY24, its net income increased by 26.09% YOY and reached ₹ 145 crores.
  • In the last 3 years, it has maintained above 25% dividend payout ratio. As it has enough funds, even if it pays all its debts, we may see an increase in the dividend payout ratio in future.
  • As technology is getting more sophisticated, various sectors, like healthcare, finance, manufacturing, etc., are demanding industry-specific IT solutions. Birlasoft can benefit from the trend by providing custom solutions to industry-specific IT problems.
  • Businesses are implementing automation in their work along with the integration of artificial intelligence. Birlasoft can harness the new opportunities created in this segment by capitalising on its expertise in such technology.
  • The pandemic has given a boost to the speed of digital transformation in various industries. Due to the limited availability of professionals, a pent-up demand was created, which made IT companies make better margins. Once the digital transformation is completed, it still needs regular maintenance, thus giving Birlasoft an opportunity to have a long tenure of maintenance contracts.

Positive Analyst Ratings

HDFC Securities has maintained a “buy” rating for Birlasoft with a target price of ₹ 800. Its rating is based on 26x FY26E, which is supported by the momentum in the organic growth & improvement happening in the return metrics. HDFC Securities believes that Birlasoft has a scalable services portfolio and adaptability in the present macroeconomic scenario.

Potential Scenarios Following an All-Time High

(Based on the chart of 1-month timeframe)

Converting numbers and candles into information can provide us with the market’s stance on the stock, which may help us make correct investment decisions. Since its listing in January 2003, it has broken many all-time highs. If we consider the all-time highs that were made after a gap of at least a month, then the first all-time high of the year 2023 was made in November 2023. The journey from April 2023 to December 2023 has been a display of bull run. It has continuously made higher highs and higher lows, thus creating a situation where the low of the previous month was never touched. One may enter the stock at the price of their liking and keep the stop loss at the low of the previous month.

Birlasoft Stock Analysis: Potential Supports and Targets

Fri 22 Dec 2023 - In a remarkable market development, Birlasoft has soared to ₹746.00, setting a brand-new All Time High record! With this surge, there are chances of it becoming volatile, as many investors may like to book their profits by exiting or closing their positions. At this time potential investors and current stakeholders should keep an eye for opportunities for entry or exit.

Below you will find Birlasoft's metrics highlight, potential support and targets derived using Fibonacci Retracement and Extensions method, where Golden Ratio is assumed to be a good support (entry point) and Golden Extension to be good resistance (target point)

KEY PERFORMANCE METRICS

MetricsValueOccured On
Close Price₹741.20Fri, 22 Dec 2023
52 Week High₹746.00Fri, 22 Dec 2023
52 Week Low₹250.25Fri, 03 Feb 2023
All Time High₹746.00Fri 22 Dec 2023

The above table shows that the close price of Birlasoft on Fri, 22 Dec 2023 was ₹741.20. Notably, the All-Time High is same as the 52-Week High, indicating that the all-time high was achieved recently and it cloud be a strong resistance level which would need great upward momentum to break.

It's possible that some investors might consider booking profits near the 746.00 mark, which could apply downward pressure on the stock price. But what does this newly created milestone signify for potential investors? Lets find out.

Birlasoft Fibonacci Retracement Or Support levels

For those considering an entry, the Golden Ratio (61.8%) retracement level of ₹439 offers a promising point, given the likelihood of a pullback from these levels as new investors might come in at these levels.

Retracement or Support LevelsValues
S123.6%₹629
S238.2%₹556
S350.0%₹498
S461.8% (Golden Ratio)₹439
S578.6%₹356
S652 Week Low₹250

Note: This table was last updated on Fri, 22 Dec 2023.

Birlasoft Fibonacci Extensions Or Target levels

For those considering an exit, the Golden Extension (161.8%) level of ₹1052 offers a promising point, given the likelihood of a downward momentum from these levels as investors might start booking their profits at these levels.

Extensions or Target LevelsValues
T152 Week High₹746
T2138.2%₹935
T3161.8% (Golden Extension)₹1052
T4200%₹1241
T5261.8%₹1548

Note: This table was last updated on Fri, 22 Dec 2023.

Making Informed Investment Decisions

For any stock, reaching an all-time high is a significant milestone. Still, conducting thorough research and considering various factors is essential before making investment decisions. To make informed choices that align with your investment goals and risk tolerance, one needs to analyse the company’s fundamentals, industry trends, management’s strategy, and overall market conditions.

Company’s Financial Health

  • In 2022, Birlasoft had a debt of ₹ 102 crores covered by a free cash flow of ₹ 518 crores and cash & equivalents of ₹ 469 crores. It shows a healthy difference between funds available and the debt, which is a sign of good financial health.
  • In the short term, it has a liability of ₹ 624 crores covered by assets of ₹ 2160 crores. The assets of ₹ 1053 crores cover its long-term liabilities of ₹ 140 crores.

Industry Outlook

  • The expansion of the Internet of Things (IoT) provides a new opportunity for the IT industry to revamp the services offered and align them with the latest technology being commercially used. It will ensure future growth in income as the trend picks up.
  • Many companies are taking data protection seriously, and the same is being made necessary through regulations in various countries. The Indian IT industry can provide its expertise in the relevant segment at a competitive price, thus benefiting both the companies in India and contract providers.
  • Data analytics and business intelligence have made the whole decision-making process much more refined. To make such data-driven decisions, mostly separate service providers are used. The Indian IT industry can gain from this trend and capitalise on the years of investment that they have already made in this field.

Market Sentiment

Birlasoft’s ascent to an all-time high is a result of a combination of strong financial performance, favourable analyst ratings and strong industry trends. The company’s financial health is robust as its debt is significantly less in comparison to its total funds available, thus creating an opportunity for the future where the dividend payout ratio may see a significant increase from the general trend. The favourable industry outlooks in IoT, data protection, and analytics position Birlasoft favourably for sustained growth. Investors need to conduct detailed research, considering factors like company fundamentals, industry trends, and financial health, to make informed investment decisions.

Disclaimer: Information is provided ‘as is’ and solely for informational and educational purposes, not for trading purposes or advice. We highly recommend to do your own research before making any investment.

About The Author

Nippun

Hi, I’m Nippun, a tech enthusiast from Haryana, India. I have been coding since 2010 and using my coding skills in the share market since 2020. I have been coding scripts in Pinescript that work on Tradingview app/web. I love learning about new technology and applying it to solve real-world problems. Coding and share-market are my passions, and I enjoy finding and fixing bugs in code. I aim to share my skill set and experience that can positively impact society. Feel free to connect with me, and let’s learn from each other. My Twitter