ExlService Holdings (EXLS): A Fresh Look at Valuation as AI Growth and Raised Guidance Drive Momentum

ExlService Holdings (EXLS) just delivered third quarter results showing solid revenue and earnings growth, with a big boost from its expanding portfolio of data and AI-led solutions. Management also raised their full-year 2025 guidance, which signals ongoing momentum.

See our latest analysis for ExlService Holdings.

While ExlService Holdings continues to rack up impressive wins, from a major AI partnership with Schneider National to the recent board appointment of a healthcare veteran, investors have seen the share price under pressure, with a year-to-date share price return of -11.6%. That said, the company’s three-year total shareholder return of 10.5% and a five-year total return of 143% show that the long-term growth story remains intact and momentum could strengthen as new initiatives take hold.

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Despite this impressive operational performance and raised outlook, shares continue to trade well below analyst price targets. This raises an important question for investors: Is EXLS undervalued after its pullback, or is the market already factoring in future growth?

Most Popular Narrative: 26.6% Undervalued

ExlService Holdings trades well below the prevailing fair value estimate, leaving a significant gap between the last close and the narrative price target. This creates an intriguing dynamic for investors who are focusing on future growth as a catalyst for a potential re-rating.

The accelerated global adoption of AI and digital transformation in regulated industries is expanding the addressable market for ExlService, driving a strong double-digit pipeline and growing annuity-like revenues. This trend supports sustained revenue growth and improved earnings visibility. Increasing reliance by clients on advanced data and AI-driven solutions for operational efficiency positions ExlService to generate higher-margin services, benefiting both the revenue mix and long-term margin expansion as traditional usage-based contracts transition to outcome-based commercial models.

Read the complete narrative.

Want to know what’s fueling that bold upside? The narrative’s foundation is rapid adoption in new sectors, margin upgrades, and a valuation multiple similar to premium growth stocks. Just how ambitious are the future projections needed to justify this target? The powerful drivers behind this fair value may surprise you. Discover the key assumptions inside.

Result: Fair Value of $53.29 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing global regulatory changes and rising talent costs could pressure margins. These factors may challenge the long-term bullish outlook if not well managed.

Find out about the key risks to this ExlService Holdings narrative.

Another View: What Do Earnings Multiples Say?

Taking a look at the earnings multiple, EXLS trades at 25.7x earnings, which is just below the peer average of 27x and almost matches the US Professional Services industry average of 25.9x. The fair ratio sits even lower at 25.2x. This suggests EXLS is modestly valued against its industry and peers. However, is the slight discount enough to spark a market move, or does it signal caution about future growth?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own ExlService Holdings Narrative

If you’re ready to dig deeper, you can analyze the numbers and build your own story around EXLS based on your independent perspective, all in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding ExlService Holdings.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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