Firstsource Shares Rise 16%, Extend Three-Day Gain to 24% Following Q4 Results, Backed by Improved FY27 Outlook
Firstsource Solutions Shares Extend Rally, Surge 23% in Three Days
Shares of Firstsource Solutions, a leading global Business Process Management (BPM) company and part of the RP-Sanjiv Goenka Group, continued their upward trajectory on May 8, with a 15% increase in trading value.
This rally marks the third consecutive day of growth for the company's shares, following the announcement of its Q4 results. The net profit for the March quarter rose significantly, with a 28% increase to Rs 205 crore. Revenue also saw a substantial growth of 20% year-over-year (YoY) to Rs 2,583 crore.
As of 12 pm on May 8, Firstsource Solutions shares were trading at Rs 272 apiece, a 16% increase from the previous day. This impressive growth is a testament to the company's strong performance and the confidence of investors in its future prospects.
Domestic brokerage JM Financial has given a 'BUY' rating for the stock, with a target price of Rs 290. The brokerage cited the company's "decent FY27 guidance in a soft environment" as a key factor in their decision. While revenues and margins were below expectations, the brokerage noted that they were largely in line with consensus.
A detailed analysis of the company's performance reveals a revenue growth of 3% quarter-on-quarter (cc) compared to JM Financial's estimate of 5.8%. This decline was primarily due to delays in the UK collections deal ramp and the ramp at payer clients, which were affected by regulatory approvals and Medicare payment ramps, respectively.
However, the brokerage believes that these revenue headwinds are now behind the company, and will likely aid revenue growth in FY27. The medium-term aspirations of double-digit cc YoY growth are maintained, and the brokerage has revised their FY27-28E EPS by 1-3%. The target multiple remains at 18x, roll-forwarded to FY28E EPS (previously Sep'27E). The revised target price is Rs 290, up from Rs 260.
| Brokerage | Revenue Growth (QoQ cc) | EBIT Margin |
|---|---|---|
| JM Financial | 5.8% | 12.4% |
| Actual | 3% | 12.2% |
Key Statistics
- Net profit in March quarter: Rs 205 crore (28% increase)
- Revenue in March quarter: Rs 2,583 crore (20% YoY growth)
- Target price: Rs 290 (revised from Rs 260)
- Rating: 'BUY' (JM Financial)
Investor Takeaway
Investors should consider buying Firstsource Solutions stock due to its improved FY27 outlook.
More in Market
Market Analysis: Key Stocks to Watch - Narayana Hrudayalaya, ABB India, Federal Bank, Premier Energies, Ather Energy and More
FirstClub Secures $55 Million in Funding from Peak XV, Sofina, and Other Investors 9 Months After $22 Million Series A Round
Global Markets: Key Indicators to Monitor in Today's Trading Session
