Buy Firstsource Solutions; target of Rs 45: Dolat Capital

Dolat Capital's research report on Firstsource Solutions

Firstsource Solutions (FSL) had quite an eventful FY20 with changes in the top leadership (inducted external CEO) and few other business heads. Reconfiguration of its strategy under new CEO is around accelerating growth (GTM sales), scope (adjacencies, CX-CM) and scale (getting into new verticals such as Tech and expansion in Utilities) although the same has resulted in temporary reduction in profitability due to scaled investments in hiring/capabilities. We believe the renewed strategy augurs well towards adding stability and drivers to revenue profile.

Outlook

Given the huge business prospects, attractive dividend yield (6%+) and compelling valuations we maintain our Buy rating on the stock with TP of Rs45 valued at 8x PE on FY22E earnings.

Firstsource Solutions 01072020-dolat