Firstsource Solution (FSL)'s dollar revenues increased 8.2% QoQ to US$199.9 million. EBIT margins increased 60 bps QoQ to 12.6% mainly led by higher gross margins. The company has incurred one off exceptional expense of Rs. 109 crore. Hence, PAT declined 61% QoQ to Rs. 46.7 crore. Adjusting for the exceptional item, PAT increased 8.1% QoQ to Rs. 130.9 crore. FSL has guided 15-18% YoY growth in FY22E revenues in constant currency terms and operating margins in the range of 11.8-12.3%.
Valuation & Outlook
Improvement in provider segment, traction in collection segment, diversification in CMT segment, new logo wins, focus on client mining cross-selling of platforms business and hiring of leaders bodes well for long term revenue growth. This coupled with improving margins, prompt us to maintain BUY on the stock with a target price of Rs. 151 (15x PE FY23E EPS) (earlier target price Rs. 120/share).
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Shares of FIRSTSOURCE SOLUTIONS LTD. was last trading in BSE at Rs.128.25 as compared to the previous close of Rs. 123.2. The total number of shares traded during the day was 904959 in over 10658 trades.
The stock hit an intraday high of Rs. 131 and intraday low of 119.1. The net turnover during the day was Rs. 114063359.