Is EXL’s Recent Partnership News Shifting Its True Value in 2025?

• Wondering if ExlService Holdings is offering genuine value or hiding risks beneath the surface? You are not alone—many investors are closely examining the numbers for answers.
• The stock has slipped 14.1% over the last year. Interestingly, it has gained 3.3% in the past month, which may indicate renewed optimism or changing perceptions in the market.
• Recent headlines have focused on ExlService Holdings' strategic shifts and new client partnerships. These developments are fueling speculation about the direction of its long-term growth and may be influencing how investors assess both opportunities and risks.
• When it comes to valuation, ExlService Holdings currently scores 3 out of 6 on our value checks. This suggests there are notable strengths, but also some aspects to keep in mind. Let us break down the main approaches analysts use to value the business, and at the end, we will point you to an even smarter way to put those numbers in context.

Find out why ExlService Holdings's -14.1% return over the last year is lagging behind its peers.

Approach 1: ExlService Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates the present value of a company by projecting its future cash flows and discounting them back to today. This approach helps investors understand what the business might be worth, based purely on its ability to generate cash over time.

For ExlService Holdings, the analysis begins with its most recent Free Cash Flow (FCF), recorded at $280.95 Million. Analysts supply estimates covering the initial five years. From there, future years' cash flows are projected forward by Simply Wall St, reflecting moderate growth over the decade.

By 2027, Free Cash Flow is projected to reach $342 Million. The DCF model then extrapolates this further to about $495 Million by 2035. Each of these future values is discounted back to today, providing a well-rounded perspective on ExlService Holdings’ long-range cash-generating power.

The DCF-based intrinsic fair value comes out to $57.10 per share in US dollars. With the current share price implying the stock is trading at a 30.3% discount, the numbers suggest ExlService Holdings is significantly undervalued based on this methodology.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests ExlService Holdings is undervalued by 30.3%. Track this in your watchlist or portfolio, or discover 933 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for ExlService Holdings.

Approach 2: ExlService Holdings Price vs Earnings

When evaluating profitable companies like ExlService Holdings, the Price-to-Earnings (PE) ratio is an especially useful valuation metric. It tells investors how much they are paying for each dollar of current earnings, making it a direct and intuitive way to assess value when profits are stable and growing.

What counts as a “normal” or fair PE ratio can vary, since companies with higher growth expectations or lower risks usually command higher multiples, while those with slower growth or higher perceived risks trade at lower ones. For ExlService Holdings, the current PE ratio stands at 26.2x. This compares closely to both the peer average (26.0x) and the broader professional services industry average (24.3x). This suggests the market views its growth prospects and risk profile as comparable to competitors.

Simply Wall St’s proprietary Fair Ratio for ExlService Holdings, at 23.9x, is designed to give a more precise target by factoring in variables like the company’s earnings growth, profit margins, industry, market capitalization, and unique risk profile. Unlike a simple benchmark against peers or industry averages, the Fair Ratio shows whether the current valuation is truly justified given all these elements. It is not just a comparison to the broader group.

With a PE ratio of 26.2x versus the Fair Ratio of 23.9x, the stock is trading slightly above what would be expected for its fundamentals. However, the difference is relatively modest, indicating that ExlService Holdings is priced about right on this basis.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1441 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your ExlService Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply your story—your perspective on ExlService Holdings—explained in terms of what you believe about its future revenue, earnings, profit margins, and ultimately, its fair value. Narratives connect your understanding of the company’s strategy, industry trends, and risks directly to a specific financial forecast and a price target, making your investment view more concrete and actionable rather than just relying on broad market metrics.

On Simply Wall St’s Community page, Narratives are an easy and accessible tool used by millions of investors to document and share their outlook on a company's prospects. They help you decide when to buy or sell by comparing the Narrative’s fair value with the live market price, and are updated automatically as new data or company news arrives, so your decision-making stays dynamic and current.

For example, with ExlService Holdings, some investors are optimistic that continued momentum in AI and analytics will push its fair value above $54 per share, while others focused on the risks of rising costs and industry competition see a fair value closer to $44, making Narratives a practical way to compare and sense-check your expectations with the market and community.

Do you think there's more to the story for ExlService Holdings? Head over to our Community to see what others are saying!

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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