Shares of Firstsource Solutions extended its Q4 results rally to jump over 6% in early trade as brokerages maintained a bullish outlook over high volumes in the last few sessions. The smallcap information technology (IT) company reported a strong performance in the March quarter beating Street estimates in terms of topline and net profit surge amid healthy near-term outlook. The IT major's revenue grew 3% sequentially on constant currency (CC) terms and net profit rose 27.8% to Rs 205.2 crore.
On Thursday, shares of Firstsource Solutions opened at Rs 244.05 higher against a previous close of Rs 242.80 and jumped 6% to hit an intrday high of Rs 264.40 apiece on the NSE. The IT stock has risen 4% in one week and 13% in one month. However, it has dropped 27% on a year-to-date basis and 35% in the last one year. The company commands a market cap of Rs 17,007.27 crore.
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Firstsource Solutions Q4 Results
The management expressed high visibility to the lower end of guidance with pipeline conversion offering upside. Growth is expected to be evenly distributed across quarters. On an organic basis, the IT firm's FY26 CC growth was 12.1% year-on-year (Y-o-Y) excluding both PDC and TeleMedik. Excluding consolidation of Ascensos (nearly five months contribution), organic CC growth was 9.8%. The management reiterated a medium-term aspiration of 14-15% Ebit margins over the next 3-4 years. Margin expansion levers include offshore/nearshore mix, AI-led productivity gains and operating leverage.
For FY26, the company posted constant currency revenue growth of 13.6%, below its revised guidance range of 14.5-15.5%, which had included a 1.5% contribution from acquisitions. EBITDA surged 35.7% to Rs 460 crore, with margins expanding to 17.6% from 15.6% a year ago. Firstsource Solutions is a leading global Business Process Management (BPM) company, part of the RP-Sanjiv Goenka Group.
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Should you buy Firstsource Solutions shares?
Domestic brokerage Anand Rathi retained its 'Buy' rating, citing robust revenue growth and strong deal momentum. "Deal wins remain strong with four large deals in each of the last five quarters with deal pipeline now highest ever at over $1 billionm,'' it said. JM Financial also gave a 'BUY' rating for Firstsource and hiked its target price on the stock to Rs 290 from Rs 260 amid "decent FY27 guidance in a soft environment". Global brokerage Nomura maintained its 'Buy' rating on the counter, calling it the "preferred small cap IT/BPO stock." Nomura noted that the company has guided for 10-13 per cent YoY revenue growth in FY27E, including an inorganic contribution of 2-2.5 per cent in constant currency terms.
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