ICICI Direct is bullish on Firstsource Solutions has recommended buy rating on the stock with a target price of Rs 60 in its research report dated May 07, 2019.
ICICI Direct's research report on Firstsource Solutions
Firstsource Solutions (FSL) reported a weak performance on the revenue front as revenues declined 1.8% QoQ to Rs 967 crore mainly on account of a delay in deal closure in the collection business (from December end to April end). Lower employee expenses (down 3.4% QoQ) led to a beat on margin expectations to 14.3% (vs. 13.6% estimate). Based on the positive outlook for BFSI, healthcare provider segment and digital revenues, we expect accelerated growth for the next two years and estimate growth of 8.2% CAGR to Rs 4477 crore in FY19-21E with EBITDA margins of 14.5% in FY21E.
This coupled with reasonable valuation (7.7x FY21E EPS) prompts us to maintain our BUY recommendation with a revised target price of Rs 60/share (~9x FY21E EPS).
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