CARE Ratings has reaffirmed the credit ratings for Birlasoft’s bank facilities. The long-term bank facilities are rated CARE AA+; Stable, with an amount of ₹307.00 crore. Both long-term/short-term and short-term bank facilities are also reaffirmed at CARE AA+; Stable / CARE A1+ and CARE A1+ respectively. These ratings reflect Birlasoft’s established position and robust financial standing.
Credit Ratings Reaffirmed
CARE Ratings Limited has reaffirmed the ratings assigned to the bank facilities of Birlasoft. This decision reflects the company’s strong position in the IT services industry and its healthy financial risk profile.
Rating Details
The ratings for Birlasoft’s bank facilities are as follows:
- Long-term Bank Facilities: CARE AA+; Stable, Amount: ₹307.00 crore
- Long-term/Short-term Bank Facilities: CARE AA+; Stable / CARE A1+, Amount: ₹20.00 crore
- Short-term Bank Facilities: CARE A1+, Amount: ₹25.00 crore
Key Rating Drivers
The reaffirmation of Birlasoft’s ratings is supported by several factors:
- Established position in the IT services industry, particularly in MedTech, Cards & Payments, Asset Management, and ERP implementation services.
- Robust capital structure.
- Healthy cash flow generation.
- Strong liquidity with cash and liquid investments exceeding ₹1,900 crore as of March 31, 2025.
- Benefits from being part of the CKA Birla Group.
Financial Performance
In FY25, Birlasoft reported a decline in PBILDT margins by approximately 300 bps year-over-year due to a challenging demand environment in the USA. The company has a healthy order pipeline, with a total contract value of US$236 million. The company’s diversified service offerings and focus on digital, cloud, and AI capabilities provide medium-term revenue visibility.
Rating Sensitivities
Positive factors that could lead to an upgrade in the rating include:
- Significant improvement in scale of operations and geographical diversification.
- Ability to enhance operating profitability margins to 20% or more on a sustained basis.
Negative factors that could lead to a downgrade in the rating include:
- Incremental sizeable debt-funded acquisition that moderates capital structure.
- Slowdown in key verticals resulting in significant pressure on income and PBILDT margin falling below 12%.
- Major regulatory challenges impacting operations.
Outlook
The outlook on the ratings is ‘Stable,’ reflecting the expectation that Birlasoft’s financial risk profile will remain strong in the near-to-medium term, supported by its established business profile and healthy order book position.
Source: BSE
