Dolat Capital Market has given Buy recommendation for Firstsource Solutions with a target price of Rs. 150 in its research report issued on Feb 10, 2021

Dolat Capital Market’s research report on Firstsource Solutions

FSL reported Revenue growth of 14.6% in CC terms (DART estm: 5.6%) due to continued traction in BFSI Vertical (up 15.8% QoQ in $ terms) and top client growth of 24.9% QoQ in $ terms. OPM improvement of 20bps QoQ at 11.6% (DE: 11.4%) led by strong operating leverage which was part negated by strong hiring (added ~4.8k resources over Q2/Q3). FSL upgraded the FY21 Guidance to 16-17% from 9%-12% CC growth and lower end of OPM guidance by 30bps to 11.3%-11.5%. This implies 0.5% to 3.5% growth in Q4. Commentary is encouraging as provider segment is expected to recover gradually & client additions healthy (YTD added: 43 clients) with visible in-roads in Born-digital and Fintech segment. With revived operating structure, new leadership is making inroads into newer opportunities as evident from addition of 9 Born-digital cos to client roster in 9M & building domain capabilities. Mortgage Biz ($55mn in size) will continue traction driven by low interest rate.

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