- 04 Aug 2022
- ICICIdirect Research
Firstsource reports weak numbers; revises downward revenue guidanceFSL - 111 Change: 0.80 (0.73 %)
News: The company reported 7.1% QoQ revenue decline to US$191mn for the quarter ( 5.1% decline in CC), while rupee revenue was down by 4.7% QoQ to Rs1472 crore. The revenue growth was impacted due to continued weakness in mortgage business (30% decline QoQ as per our calculation). EBITDA was down 26% QoQ while margins were down 357bps QoQ to 12.3% due to revenues and 5.4% QoQ increase in SG&A expenses. PAT was down 35% QoQ. The company has revised downward revenue guidance from 7-8% in CC for FY23 to 2-4% in CC terms. Ex- mortgage and acquisitions, it guided for 18-22% growth in FY23 which revised downwards to 16-19%.
View: The company expects mortgage business environment has worsened than their earlier anticipation and expects further slowdown in this business for next couple of quarters before it settles in Q4. This implies that the numbers in mortgage business for FY23 would be lower than its guidance of US$125-135mn for FY23 due to which guidance has been revised downwards. Revenue guidance Ex- mortgage and acquisitions also has been trimmed down indicating some weakness in the healthcare business as well. The company expects EBIT margins to gradually improve from 8% in Q1 to 11.5-12% in Q4 due to cost rationalisation initiatives and guided for 10-10.5% EBIT margins in FY23.