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Nov 13, 2017 05:21 PM IST | Source:

Hold Firstsource Solutions; target of Rs 45: Sharekhan

Sharekhan recommended hold rating on Firstsource Solutions with a target price of Rs 45 in its research report dated November 02, 2017.

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Sharekhan's research report on Firstsource Solutions

The numbers of Firstsource Solutions Limited  (FSL) are not strictly comparable on QoQ basis  as the company divested some of its domestic  businesses during Q1FY2018. During Q2FY18,  FSL reported another quarter of better-than- expected operating performance against our  modest estimates for Q2FY2018. Operating  profit margin (OPM) improved by 110BPS QoQ  (ahead of our estimates) despite Rs 3.5 crore  (one-off) shutdown costs relating to domestic  business, led by improved profitability in ISGN  business along with 7.6% QoQ decline in  operating expenses. Better-than-expected OPM  resulted in net profit beat, that grew 5.1% QoQ to  Rs68.8 crore in Q2FY18. The company’s revenue  declined by 0.9% QoQ on constant currency  (CC) basis, largely in-line with our expectation.  On a reported basis, FSL’s revenue declined by  0.5% QoQ to Rs.873.0 crore owing to divestment  of domestic business. On comparable basis  (excluding the domestic business), the revenues  increased by 3.1%QoQ to Rs850.8 crore, while  OPM expanded by 160bps QoQ to 13.2% in  Q2FY2018.

we maintain our Hold rating with  a revised price target of Rs.45. However, any  favourable corporate event to unlock the value  for minority shareholders would be an upside  trigger.

For all recommendations report, click here

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