Q3FY21 Company Update - Firstsource Solutions - ICICI Direct

Firstsource Solution (FSL) reported a healthy set of Q3FY21 numbers. Dollar revenues increased 15.6% QoQ (up 24.9% YoY) led by healthy growth in top client, 15.9% QoQ growth in BFS and 26.1% QoQ growth in communication, media and technology (CMT). In rupee terms, revenues increased 29.6% YoY, 14.9% QoQ. EBIT margins increased 20 bps QoQ to 11.6%. Total debt declined from Rs. 843.3 crore in FY20 to Rs. 505.4 crore in 9MFY21. FSL has guided 16-17% YoY growth (up from earlier guidance of 9-12%) in FY21E revenues in constant currency terms and operating margins in the range of 11.25-11.5%.

Valuation & Outlook

Healthy growth in mortgage business, improvement in provider segment, traction in top client, healthy deal pipeline, new client wins, cross-selling of platforms business and hiring of leaders to boost its digital business are expected to drive long term revenues. This, coupled with improving margins, prompt us to maintain BUY on the stock with a target price of Rs. 120 (14x PE FY23E EPS) (earlier target price Rs. 84/share).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Firstsource_CoUpdate_Feb21.pdf

Shares of FIRSTSOURCE SOLUTIONS LTD. was last trading in BSE at Rs.97.55 as compared to the previous close of Rs. 98.15. The total number of shares traded during the day was 161345 in over 1165 trades.

The stock hit an intraday high of Rs. 99.95 and intraday low of 97. The net turnover during the day was Rs. 15896792.

Source : Equity Bulls

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