Tera Software Limited (TERASOFT) AI Stock Analysis

• Market Cap: ₹3.98B
• Dividend Yield: 0.23%
• Average Volume (3M): 4.52K
• Price to Earnings (P/E): 19.6
• Beta (1Y): 0.90
• 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: ₹334.00 ▼(-24.27% 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

Revenue & Profit Improvement

Sustained ~27% revenue growth with improved gross and net margins indicates stronger product-market fit and pricing power in e-governance and services. This durable top-line expansion expands contract scale and recurring service revenues, supporting longer-term earnings stability and reinvestment capacity.

Stable Balance Sheet

A roughly 57% equity ratio and declining debt-to-equity provide financial resilience for project-backed receivables and working capital needs. This structural strength lowers refinancing risk, supports bid capacity for large government contracts, and affords flexibility for strategic investments over the medium term.

Improved Cash Generation

Transitioning free cash flow from deficit to positive and favorable operating cash flow to net income signals improved conversion of profits into cash. Durable operating cash generation reduces dependence on external funding and supports sustainable maintenance, support services, and contract execution.

Negative Factors

Margin Volatility

Fluctuating EBIT and EBITDA margins reflect project mix, pricing pressure or variable execution costs common in government and systems-integration work. Persistent margin variability undermines earnings predictability, complicates budgeting and weakens confidence in sustainable operating profitability.

Volatile Free Cash Flow

While FCF turned positive, its volatility suggests uneven timing of collections or project-related cash swings. This structural variability can strain funding of capex, bid bonds or working capital, raising reliance on short-term financing and limiting stable capital allocation over months ahead.

Meaningful Liabilities

Despite improved leverage ratios, material liabilities relative to assets leave the company exposed to payment delays or contract slowdowns. This structural liability burden can restrict strategic flexibility, increase refinancing needs, and heighten risk if government receivables or project timelines shift.

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 primarily through its e-governance projects, which involve providing IT solutions and services to government organizations for streamlining their operations. This includes system integration services, software application development, and consulting services tailored for public-sector projects. Additionally, the company earns income from other verticals such as software services to private enterprises and maintenance or support services for its implemented solutions. Collaborations with government agencies and ongoing IT service contracts significantly contribute to its revenue.

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	1.62B	1.07B	844.83M	1.17B	1.27B	1.61B
Gross Profit	865.39M	888.07M	658.40M	258.23M	107.20M	125.33M
EBITDA	277.05M	163.01M	92.63M	152.94M	86.48M	82.83M
Net Income	162.98M	94.15M	34.41M	34.66M	-13.02M	8.43M
Balance Sheet
Total Assets	2.90B	2.13B	2.07B	1.97B	2.74B	2.98B
Cash, Cash Equivalents and Short-Term Investments	829.94M	217.65M	202.89M	160.08M	100.41M	137.74M
Total Debt	289.37M	199.27M	334.59M	241.53M	605.42M	546.15M
Total Liabilities	1.56B	908.60M	948.31M	893.93M	1.67B	1.90B
Stockholders Equity	1.34B	1.22B	1.12B	1.08B	1.07B	1.09B
Cash Flow
Free Cash Flow	-97.37M	67.35M	-50.26M	325.27M	-212.41M	-368.82M
Operating Cash Flow	-72.93M	68.10M	-48.76M	327.62M	-212.41M	-368.82M
Investing Cash Flow	-22.31M	6.27M	6.55M	32.33M	5.37M	11.65M
Financing Cash Flow	54.12M	-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: Neutral

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 355.38, above the 50-day MA of 382.47, and above the 200-day MA of 390.11, indicating a bearish trend. The MACD of -18.86 indicates Positive momentum. The RSI at 35.32 is Neutral, neither overbought nor oversold. The STOCH value of 23.39 is Neutral, 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	₹4.53B	15.31	―	―	20.39%	11.63%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
INSPIRISYS	61 Neutral	₹3.05B	4.73	―	―	-1.07%	187.83%
TERASOFT	60 Neutral	₹3.98B	19.62	―	0.23%	71.84%	138.63%
AARTECH	56 Neutral	₹1.43B	63.14	―	0.26%	9.12%	22.53%
DEVIT	54 Neutral	₹1.43B	-6.20	―	0.49%	30.15%	330.45%