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- 06 May 2022
- ICICIdirect Research
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FIRSTSOURCE GUIDES FOR 7-10% REVENUE GROWTH IN FY23
FSL - 352 Change: -2.75 (-0.78 %)News: Firtsource reported strong numbers on revenues in Q4 while margins were down sequentially. Revenues came in at Rs1,544 crore( +5.5% QoQ) while in dollar terms, revenues were US$205.5mn (+5.4% QoQ, +3.1% CC growth) . EBIT margins came in at 11.3% which were down ~70bps QoQ and were impacted by 22% QoQ rise in other expenses. PAT came in at Rs132.4 crore ( -2.3% QoQ) was impacted due to weak operating performance. For FY22, revenues came in at Rs5,921 crore ( +16.6%) while in dollar terms, revenues were US$795.2mn (+16% YoY, 14.6% in CC). EBIT margins for FY22 stands at 12% up 20bps vs FY21. The company guiding 7-10% revenue growth in FY23 and EBIT margins in the range of 10.5-11%.
Views: The company’s FY22 revenue & EBIT margin performance was at the upper end of the guidance i.e revenue growth of 14.6% CC vs 14-14.5% CC growth guidance & 12% EBIT margins vs guided range of 11.8%-12%. The company is now guiding of 7-10% in CC in FY23 at the company level factoring i) 40% decline in mortgage business in FY23 due to lower refinance volumes. Our back of the envelope calculation suggests revenue growth ( ex- mortgage) in FY23 could be between 24-28%. The company EBIT margin guidance is lower vs FY21 factoring costs pressures ( offshore attrition is 46%, highest in many quarters) and ARSI integration which commands lower EBIT margin vs company level.
Impact: Negative