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Dolat Capital Report
Firstsource Solutions Ltd. reported constat currency revenue growth of 4.2% QoQ (our estimate: 2.8%) led by healthcare/communication, media and telecom up 2.7%/9.6% growth, while banking, financial services was up 2.1% QoQ.
Operating profit margin was up 30 basis points QoQ to 11% (our estimate: 10.9%) despite investments in sales engine.
Firstsource Solutions shared CC revenue growth guidance of 10%-13% for FY25 including contribution of ~160 bps from QBSS acq. (versus FY24: 1.1%) and operating profit margin band of 11-12%. It aims to achieve $1 billion exit organic revenue run-rate by FY26E.
We believe strong execution focus and deal wins across existing/new clients will help in picking-up the growth momentum, while we remain watchful of pickup in mortgage/provider as it would be a key in driving robust growth.
We tweak our FY25/FY26E earnings per share estimate (-2.2%/+0.1%) and maintain ‘Accumulate’ rating with target price of Rs. 230 valuing at 22 times on FY26E EPS (~two times PEG).
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