Is Birlasoft Ltd overvalued or undervalued?

As of 4 July 2025, Birlasoft Ltd has moved from a fair to an attractive valuation grade. The company is currently considered undervalued, with a PE ratio of 23.41, an EV to EBITDA of 14.83, and a PEG ratio of 0.00, indicating significant growth potential relative to its price. In comparison to peers, TCS has a PE ratio of 25.49 and an EV to EBITDA of 17.82, while HCL Technologies shows a PE of 26.94 and an EV to EBITDA of 17.49, highlighting that Birlasoft is trading at a lower valuation despite strong performance metrics.
The company's return on capital employed (ROCE) stands at an impressive 35.42%, and its return on equity (ROE) is 14.86%, further supporting the undervaluation thesis. Despite a challenging year-to-date return of -22.33% compared to the Sensex's 6.77%, Birlasoft's long-term performance over five years shows a remarkable increase of 384.96%, significantly outpacing the Sensex's 131.62%. This suggests that the market may not fully recognize the company's potential, reinforcing the view that Birlasoft Ltd is undervalued.