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Dolat Capital Report
Firstsource Solutions Ltd. reported revenues at $186 million (inline with our estimate), down 3% QoQ in constant currency terms led by weakness in all segments (healthcare/communication, media and technology down ~4% each).
Operating profit margin rose by 15 basis points QoQ to 11.7% (our estimate: 10.7%) led by improved operational efficiencies and 4.7% sequential decline in employee cost (headcount down 3% QoQ and 11% YoY).
Firstsource Solutions maintained its constant currency revenue growth guidance of 2%-5% and operating margins of 11%-12% led by right mix, pricing and offshore leverage in FY24.
With guidance being maintain, and improved outlook for cost efficiencies, we believe the valuations are attractive and just needs growth revival as potential trigger and thus we maintain our 'Accumulate' rating on the stock with target price of Rs 150 valued at 16 times of FY25E earnings per share.
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