Firstsource Solutions (BSE:532809) - Share price, News & Analysis

Q: What is the Fair Price of 532809 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

532809 (₹100) is trading below our estimate of [[fair value]] (₹110.33)

532809 fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	2/6
Past Performance	5/6
Financial Health	5/6
Dividends	4/6

532809 Stock Overview

Firstsource Solutions Limited provides customized business process management services in India and internationally.

Rewards

Trading at 9.4% below our estimate of its fair value

Earnings are forecast to grow 11.53% per year

Earnings grew by 48.6% over the past year

Risk Analysis

Unstable dividend track record

Significant insider selling over the past 3 months

Firstsource Solutions Competitors

eClerx Services

NSEI:ECLERX

₹63.4b

Computer Age Management Services

BSE:543232

₹112.7b

Infibeam Avenues

BSE:539807

₹35.7b

BLS International Services

NSEI:BLS

₹39.7b

Price History & Performance

Summary of all time highs, changes and price drops for Firstsource Solutions
Historical stock prices
Current Share Price	₹100.00
52 Week High	₹242.65
52 Week Low	₹93.00
Beta	0.97
1 Month Change	-7.11%
3 Month Change	-21.45%
1 Year Change	-40.57%
3 Year Change	102.84%
5 Year Change	193.26%
Change since IPO	25.63%

Shareholder Returns

	532809	IN IT	IN Market
7D	2.0%	4.4%	2.3%
1Y	-40.6%	-6.1%	-0.9%

Return vs Industry: 532809 underperformed the Indian IT industry which returned -6.1% over the past year.

Return vs Market: 532809 underperformed the Indian Market which returned -0.9% over the past year.

Price Volatility

Is 532809's price volatile compared to industry and market?
532809 volatility
532809 Average Weekly Movement	5.3%
IT Industry Average Movement	7.1%
Market Average Movement	6.9%
10% most volatile stocks in IN Market	9.9%
10% least volatile stocks in IN Market	4.5%

Stable Share Price: 532809 is less volatile than 75% of Indian stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: 532809's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2001	26,557	Vipul Khanna	https://www.firstsource.com

Firstsource Solutions Limited provides customized business process management services in India and internationally. The company offers various services across the customer lifecycle, including acquisition, account servicing, collection, and retentions; sales ledger administration and collection, cash management and administration, payroll, VAT, and tax management services; credit and bank cards, private label retail cards, automotive and personal loans, overdraft accounts, and mortgage collection services; healthcare collection services; and default management, prevention, and recovery solutions. It also provides contact center and back-office processing services; claims processing and adjudication, digital mailroom and document, enterprise claim, Omni channel contact center, provider data management and credentialing, quality assurance, and telehealth support services, as well as member enrollment, billing, and eligibility services; and MedAssist, a revenue cycle product suite to enhance the revenue for hospitals and patient experience.

Firstsource Solutions Fundamentals Summary

How do Firstsource Solutions's earnings and revenue compare to its market cap?
532809 fundamental statistics
Market Cap	₹68.31b
Earnings (TTM)	₹5.37b
Revenue (TTM)	₹59.21b

12.7x

P/E Ratio

1.2x

P/S Ratio

Is 532809 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
532809 income statement (TTM)
Revenue	₹59.21b
Cost of Revenue	₹39.47b
Gross Profit	₹19.74b
Other Expenses	₹14.37b
Earnings	₹5.37b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	7.87
Gross Margin	33.34%
Net Profit Margin	9.07%
Debt/Equity Ratio	33.3%

How did 532809 perform over the long term?

See historical performance and comparison

Dividends

3.5%

Current Dividend Yield

44%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 532809 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 532809?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 532809. This is calculated by dividing 532809's market cap by their current preferred multiple.
What is 532809's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	₹68.31b

532809 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.4x
Enterprise Value/EBITDA	8.8x
PEG Ratio	1.1x

Price to Earnings Ratio vs Peers

How does 532809's PE Ratio compare to its peers?

532809 PE Ratio vs Peers

The above table shows the PE ratio for 532809 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	32.9x
ECLERX eClerx Services	15.2x	9.7%	₹63.4b
543232 Computer Age Management Services	39.3x	11.3%	₹112.7b
539807 Infibeam Avenues	41.3x	36.9%	₹35.7b
BLS BLS International Services	35.7x	22.7%	₹39.7b
532809 Firstsource Solutions	12.7x	11.5%	₹68.3b

Forward PE

Price-To-Earnings vs Peers: 532809 is good value based on its Price-To-Earnings Ratio (12.7x) compared to the peer average (32.9x).

Price to Earnings Ratio vs Industry

How does 532809's PE Ratio compare vs other companies in the IN IT Industry?

Price-To-Earnings vs Industry: 532809 is good value based on its Price-To-Earnings Ratio (12.7x) compared to the Indian IT industry average (26.1x)

Price to Earnings Ratio vs Fair Ratio

What is 532809's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

532809 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	12.7x
Fair PE Ratio	28.2x

Price-To-Earnings vs Fair Ratio: 532809 is good value based on its Price-To-Earnings Ratio (12.7x) compared to the estimated Fair Price-To-Earnings Ratio (28.2x).

Share Price vs Fair Value

What is the Fair Price of 532809 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 532809 (₹100) is trading below our estimate of fair value (₹110.33)

Significantly Below Fair Value: 532809 is trading below fair value, but not by a significant amount.

Price to Earnings Growth Ratio

PEG Ratio: 532809 is poor value based on its PEG Ratio (1.1x)

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Future Growth

How is Firstsource Solutions forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

11.5%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 532809's forecast earnings growth (11.5% per year) is above the savings rate (6.7%).

Earnings vs Market: 532809's earnings (11.5% per year) are forecast to grow slower than the Indian market (17.4% per year).

High Growth Earnings: 532809's earnings are forecast to grow, but not significantly.

Revenue vs Market: 532809's revenue (9.9% per year) is forecast to grow slower than the Indian market (11.5% per year).

High Growth Revenue: 532809's revenue (9.9% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 532809's Return on Equity is forecast to be high in 3 years time (21.1%)

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Past Performance

How has Firstsource Solutions performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

9.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 532809 has high quality earnings.

Growing Profit Margin: 532809's current net profit margins (9.1%) are higher than last year (7.1%).

Past Earnings Growth Analysis

Earnings Trend: 532809's earnings have grown by 9.4% per year over the past 5 years.

Accelerating Growth: 532809's earnings growth over the past year (48.6%) exceeds its 5-year average (9.4% per year).

Earnings vs Industry: 532809 earnings growth over the past year (48.6%) exceeded the IT industry 38.6%.

Return on Equity

High ROE: 532809's Return on Equity (17.7%) is considered low.

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Financial Health

How is Firstsource Solutions's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 532809's short term assets (₹14.2B) do not cover its short term liabilities (₹15.3B).

Long Term Liabilities: 532809's short term assets (₹14.2B) exceed its long term liabilities (₹11.4B).

Debt to Equity History and Analysis

Debt Level: 532809's net debt to equity ratio (26.4%) is considered satisfactory.

Reducing Debt: 532809's debt to equity ratio has reduced from 48.1% to 33.3% over the past 5 years.

Debt Coverage: 532809's debt is well covered by operating cash flow (69.7%).

Interest Coverage: 532809's interest payments on its debt are well covered by EBIT (11.1x coverage).

Balance Sheet

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Dividend

What is Firstsource Solutions's current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

3.50%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 532809's dividend (3.5%) is higher than the bottom 25% of dividend payers in the Indian market (0.43%).

High Dividend: 532809's dividend (3.5%) is in the top 25% of dividend payers in the Indian market (1.89%)

Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, 532809 has been paying a dividend for less than 10 years.

Growing Dividend: 532809's dividend payments have increased, but the company has only paid a dividend for 4 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (44.3%), 532809's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (38.7%), 532809's dividend payments are well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

4.9yrs

Average management tenure

CEO

Vipul Khanna

2.83yrs

Tenure

₹19,042,106

Compensation

Mr. Vipul Khanna serves as Managing Director, Chief Executive Officer and Executive Director at Firstsource Solutions Limited since August 2, 2019. Mr. Khanna was Executive Vice President and Global Head o...

CEO Compensation Analysis

Compensation vs Market: Vipul's total compensation ($USD243.29K) is about average for companies of similar size in the Indian market ($USD337.24K).

Compensation vs Earnings: Vipul's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: 532809's management team is considered experienced (4.9 years average tenure).

Board Members

Experienced Board: 532809's board of directors are considered experienced (5.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: 532809 insiders have sold more shares than they have bought in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/26 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2022/03/31
Annual Earnings	2022/03/31