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- 29 Apr 2025
- ICICIdirect Research
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FIRSTSOURCE SOLUTIONS (FSL) IN CC TERMS REPORTED A REVENUE GROWTH OF 2.1% QOQ
News: Firstsource Solutions (FSL) in CC terms reported a revenue growth of 2.1% QoQ & 25% YoY to US$ 250 mn. Vertical wise on a QoQ basis, growth was led by CMT (21% of the mix) and BFSI (33% of the mix) which grew by 3.9% and 3.5% while Others (12% of the mix) and Healthcare (34% of the mix) declined by 11% and 0.2%. Geography wise on a QoQ basis, US (68% of the mix) grew by 2.5% while UK/EMEA (32% of the mix) declined by 6%. The company reported EBIT margins of 11.2%, up ~10 bps QoQ. PAT for the quarter stood at ₹160.7 crore, marginally up sequentially. The company won 5 large deals and added 7 new logos in the quarter. For FY25, the revenue stood at US$ 944 mn, up 22.6% YoY in CC terms. EBIT margin for the year stood at 11%, flat YoY. PAT stood at ₹594.5 crore, up 15.5% YoY. FSL won 14 large deals in FY25. The company during the quarter added 507 employees taking the total headcount to 34,651 employees. The attrition stood at 29.8%, down ~160 bps QoQ.
View: FSL delivered a strong Q4FY25. The company reported record-large deal wins (5 in Q4 and 14 in FY25), including its biggest-ever healthcare contract (US$50 mn spread over 5 years in the BPaaS space i.e., an ACV of US$ 10 mn). Moreover, growth was broad-based across BFSI, CMT verticals, with North America leading regional performance, although seasonal softness weighed on Retail and Europe. FSL has guided for 12-15% (including ~3% from inorganic contribution) revenue growth in CC terms, implying 9-12% organic growth and 11.25-12% EBIT margins in FY26, expecting Healthcare to be the key growth driver while remaining cautious of macroeconomic headwinds. We highlight that guided growth is lower than our and street estimates. At ~26x FY27, the current valuations leaves less room for any significant upsides
Impact: Neutral