Birlasoft Q4 FY26: Margins rise as growth reset continues

Birlasoft closed Q4 FY26 with a quarter that looked stable in rupee terms but softer in dollar terms, reflecting the company’s high dependence on the Americas and a still cautious demand environment. Consolidated revenue for the quarter came in at ₹1,348.6 crore, up 2.4% year-on-year and marginally higher by 0.1% quarter-on-quarter. In USD terms, revenue stood at $145.3 million, down 3.7% QoQ and down 3.7% in constant currency.

Profitability, however, moved in the opposite direction. EBITDA for Q4 rose to ₹249.2 crore and the EBITDA margin expanded to 18.5%, marking the third consecutive quarter of margin expansion. PAT for the quarter increased to ₹175.9 crore, up 44.1% YoY and 46.7% QoQ, aided by higher operating leverage and tax benefits in some global operations, as explained by management.

The year in context: growth down, margins up

The full-year picture shows why management repeatedly called FY26 an unusually difficult year. Birlasoft reported consolidated revenue of $597.5 million for FY26, down 6.0% year-on-year. In rupee terms, FY26 revenue was ₹5,310 crore, down 1.2% YoY.

While the topline fell, the company delivered a sharp improvement in profitability. FY26 EBITDA margin improved to 16.3% versus 13.0% in FY25, a 333 bps expansion. On the call, management attributed this to operational efficiencies and a deliberate effort to improve the quality of revenue, including pruning tail accounts and exiting non-profitable engagements.

Management also clarified that reported FY26 PAT was affected by one-time items including labour code changes and an incremental U.S. federal tax provision. Adjusted PAT for the year was cited at ₹659.5 crore.

Financial summary (Consolidated)

Note: Q3 FY26 cash and cash equivalents are from the investor update narrative (₹24,914 million). Q4 FY25 cash and cash equivalents are from the balance sheet cash and cash equivalents line (₹3,271 million) and should not be read as identical to cash and cash equivalents metric highlighted in the investor update.

What moved in Q4: verticals, clients, and deal flow

Birlasoft’s revenue remains heavily skewed to the Americas, which contributed 84.0% of Q4 FY26 revenue, with Rest of World at 16.0%. By industry verticals, Manufacturing was the largest at 39.0%, followed by BFSI at 24.1%, Energy and Utilities at 17.7%, and Lifesciences and Services at 19.2%.

The company highlighted that Energy and Utilities was the only vertical to deliver sequential growth in Q4 in dollar terms, up 1.8% QoQ, while other verticals declined.

Client metrics pointed to a continued clean-up of smaller accounts. Active client count declined to 221 at the end of Q4 FY26 from 232 in Q3 FY26 and 254 in Q4 FY25. At the same time, the share of revenue from large customers increased. In the last twelve months, Top 5 customers contributed 42.2% of revenue, Top 10 contributed 55.2%, and Top 20 contributed 67.0%.

On the deals front, Birlasoft signed $208 million of TCV in Q4 FY26, up 3$202 million in Q3. However, the fact sheet shows a sharp drop in new TCV: total TCV new was $41 million in Q4 versus$94 million in Q3. Management suggested this was largely due to delayed decision-making by clients, rather than losses in competitive bidding, with some conversions expected to spill into Q1.

Strategy and execution: AI First push and sales build-out

A central theme of the quarter was the company’s pivot toward an AI First organization. Management discussed deploying AI-powered solutions, including the Cogito platform, across engagements to accelerate software development and automate processes through smart agents.

At the same time, management acknowledged that AI-led deals can create near-term revenue deflation because clients expect productivity benefits upfront. The CEO described this as a reason why top-line growth can lag even as the company wins deals.

To address the growth gap, Birlasoft is strengthening leadership and scaling its sales capacity. The company appointed Vikram Puranik as Chief Operating Officer, and management stated that multiple leaders have been onboarded across Data and AI, ERP, global partnerships and alliances, and the Life Sciences vertical. The CEO also said the sales team strength is expected to rise by 30% to 40% on a year-on-year basis by the middle of FY27, aimed at improving pipeline generation and order booking.

Management also acknowledged client-specific issues affecting performance. In response to a question, the CEO stated that the operational issue impacting revenue was in Life Sciences, specifically in the MedTech segment. Management said it believes the issue is behind the company, but avoided committing to near-term quarterly growth because of continuing macro uncertainty.

Margins: strong run-rate, but investments ahead

The margin story remains a key investor focus. Q4 EBITDA margin of 18.5% was supported by operating efficiencies, exchange rate tailwinds, and some one-offs. On the call, the CFO stated that the steady-state margin view excludes one-offs and reiterated that Birlasoft expects to operate in a 15% plus EBITDA margin range as it invests in sales, partnerships, leadership capacity, and its AI orchestration layer.

The company also expects normalization in taxes. The CFO said the elevated effective tax rate driven by incremental U.S. federal tax provision was limited to FY26 and is expected to settle closer to historical levels starting FY27.

Takeaways

Birlasoft’s Q4 FY26 performance reflected a business in the middle of a reset. Revenue stayed flat sequentially in INR and fell in USD terms, but margins expanded sharply and cash remained strong. Management has been explicit that restoring growth is the priority, and that the route to doing so is a bigger and more capable sales engine, a refreshed leadership team, and an AI First operating model.

The near-term trade-off is clear in management’s own commentary: AI-led work may come with upfront productivity commitments that depress revenue early, while the company simultaneously increases investments to rebuild pipeline. How quickly the improved deal momentum in the second half converts into sustained revenue growth will remain the key metric to watch into FY27.