Tera Software Limited (TERASOFT) AI Stock Analysis

• Market Cap: ₹4.27B
• Dividend Yield: 0.23%
• Average Volume (3M): 4.52K
• Price to Earnings (P/E): 21.8
• Beta (1Y): 0.88
• Revenue Growth: 71.84%
• EPS Growth: 138.63%
• Country: IN
• Employees: 899
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 5.09
• Shares Outstanding: 12,511,875
• 10 Day Avg. Volume: 2,246
• 30 Day Avg. Volume: 4,519
• PEG Ratio: 0.18
• Price to Book (P/B): 1.93
• Price to Sales (P/S): 2.20
• P/FCF Ratio: 35.07
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 60 Neutral
• Price Target: ₹424.00 ▼(-3.87% Downside)
• Action: Reiterated Date: 01/24/26
• Date: Action: Reiterated 01/24/26

The score is supported primarily by improving financial performance (profitability and revenue growth, with a steadier balance sheet), but is held back by weak technicals (clear downtrend with bearish momentum) and a relatively high P/E with limited dividend support.

Positive Factors

Strong revenue growth & improved profitability

Tera Software's ~27% revenue growth alongside improved gross and net margins indicates durable demand and improving unit economics. Sustained top-line expansion with margin recovery supports reinvestment, scale benefits, and long-term earnings power over the next several quarters.

Solid equity base and declining leverage

A roughly 57% equity ratio and falling debt-to-equity provide a stronger financial foundation and greater resilience. Lower leverage increases flexibility for capex, M&A or downturns, reducing insolvency risk and improving capacity to fund strategic initiatives without forcing asset sales.

Turnaround to positive free cash flow and strong OCF

Restoring positive free cash flow and healthy operating cash conversion signals improving cash generation quality. This supports sustainable funding of capex, working capital and debt reduction, strengthening the firm’s ability to self-finance growth over a multi-quarter horizon.

Negative Factors

Operating margin volatility

Material swings in operating margins reduce earnings predictability and can erode returns from revenue growth. Persistent volatility may constrain budgeting, raise execution risk on new contracts, and limit management’s ability to sustain investments or consistent profit improvement.

Meaningful liabilities relative to assets

Significant liabilities relative to assets increase refinancing and liquidity risk, especially if cash generation falters. This structural exposure can restrict strategic options, require higher interest coverage, and force prioritization of debt service over growth investments.

Volatile free cash flow growth

Inconsistent free cash flow growth complicates capital allocation and raises the chance of external funding needs during downturns. Persistent FCF volatility increases execution risk for long-term projects and can delay deleveraging or shareholder returns.

Tera Software Limited Business Overview & Revenue Model

Company Description

Tera Software Limited provides IT and integrated related products and services worldwide. It operates through Integrated Solutions Division, Technical Division, and Projects Division segments. The company offers its services in various categories, such as system integration and networking, and software development and consultancy, as well as GST billing, invoicing, and filing software. Its services include internet of things, human capital management, experience design, enterprise risk and security, engineering and manufacturing, customer relationship management, and consulting. The company also provides services for Aadhaar; creation of national population register; sales tax automation; electricity billing system; RTA project; ration cards; computer education in schools; and socio economic and caste census. It serves banking and financial services, communications, consumer goods, education, and energy and utilities industries. Tera Software Limited was founded in 1994 and is based in Hyderabad, India.

How the Company Makes Money

Tera Software Limited generates revenue through multiple streams, primarily by offering software licenses, subscription-based services, and consulting engagements. The company's key revenue model includes selling proprietary software solutions that address specific business needs, enabling clients to improve productivity and decision-making. Additionally, TERASOFT earns income from ongoing maintenance and support services for its software products, as well as customized IT consulting services aimed at optimizing clients' technology infrastructure. Strategic partnerships with other technology firms and system integrators further enhance its revenue potential by broadening its market reach and facilitating joint ventures on large-scale projects.

Tera Software Limited Financial Statement Overview

Summary

Income statement strength (75) is driven by improved profitability and ~27% revenue growth, but operating margin volatility is a risk. Balance sheet is fairly solid (68) with a healthy equity ratio and declining debt-to-equity, though liabilities remain meaningful. Cash flow is the weakest area (62) with improved but still volatile free cash flow.

Income Statement

Tera Software Limited has shown a commendable improvement in profitability metrics over the years. The gross profit margin has increased significantly from previous years, indicating better cost management or pricing strategies. The company also experienced a robust revenue growth rate of approximately 27% in the most recent year, reflecting strong business expansion. Net profit margin has improved considerably, showcasing enhanced operational efficiency. However, fluctuations in EBIT and EBITDA margins suggest some instability in operational performance, which might need addressing.

Balance Sheet

The company's balance sheet is relatively stable with a healthy equity ratio of around 57%, indicating a solid financial foundation. The debt-to-equity ratio has been reduced over the years, which is a positive sign of decreasing financial risk. Return on equity has improved, showing that the company is using its equity base effectively to generate profits. Nonetheless, the presence of significant liabilities in relation to assets suggests potential leverage risks that need careful management.

Cash Flow

Cash flow analysis reveals mixed results. The company has managed to turn around its free cash flow from previous deficits to a positive figure, indicating improved cash management. The operating cash flow to net income ratio is favorable, suggesting strong cash generation from operations. Yet, the fluctuations in free cash flow growth rates over the years indicate potential volatility in cash generation, which may pose challenges for future capital investments.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	1.16B	1.07B	844.83M	1.17B	1.27B	1.61B
Gross Profit	962.13M	888.07M	658.40M	258.23M	107.20M	125.33M
EBITDA	200.22M	163.01M	92.63M	152.94M	86.48M	82.83M
Net Income	109.92M	94.15M	34.41M	34.66M	-13.02M	8.43M
Balance Sheet
Total Assets	0.00	2.13B	2.07B	1.97B	2.74B	2.98B
Cash, Cash Equivalents and Short-Term Investments	103.90M	217.65M	202.89M	160.08M	100.41M	137.74M
Total Debt	0.00	199.27M	334.59M	241.53M	605.42M	546.15M
Total Liabilities	-1.22B	908.60M	948.31M	893.93M	1.67B	1.90B
Stockholders Equity	1.22B	1.22B	1.12B	1.08B	1.07B	1.09B
Cash Flow
Free Cash Flow	0.00	67.35M	-50.26M	325.27M	-212.41M	-368.82M
Operating Cash Flow	0.00	68.10M	-48.76M	327.62M	-212.41M	-368.82M
Investing Cash Flow	0.00	6.27M	6.55M	32.33M	5.37M	11.65M
Financing Cash Flow	0.00	-173.24M	64.48M	-300.27M	169.72M	336.30M

Tera Software Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 441.05
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:TERASOFT, the sentiment is Negative. The current price of 441.05 is above the 20-day moving average (MA) of 400.56, above the 50-day MA of 404.73, and above the 200-day MA of 384.97, indicating a bearish trend. The MACD of -12.49 indicates Positive momentum. The RSI at 34.58 is Neutral, neither overbought nor oversold. The STOCH value of 6.43 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IN:TERASOFT.

Tera Software Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DCI	71 Outperform	₹3.88B	19.26	―	―	20.39%	11.63%
DEVIT	66 Neutral	₹1.33B	1.95	―	0.49%	30.15%	330.45%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
INSPIRISYS	61 Neutral	₹3.52B	7.92	―	―	-1.07%	187.83%
TERASOFT	60 Neutral	₹4.27B	21.84	―	0.23%	71.84%	138.63%
AARTECH	56 Neutral	₹1.34B	64.01	―	0.26%	9.12%	22.53%