Buy Firstsource Solutions, target price Rs 145: Anand Rathi

Anand Rathi has buy call on Firstsource Solutions with a target price of Rs 145. The current market price of Firstsource Solutions is Rs 109.45. Time period given by analyst is one year when Firstsource Solutions Ltd. price can reach defined target.

Firstsource Solutions Ltd., incorporated in the year 2001, is a Mid Cap company (having a market cap of Rs 7562.35 Crore) operating in IT Enabled Services sector.

Firstsource Solutions Ltd. key Products/Revenue Segments include I T Enabled Services and Other Operating Revenue for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 1543.54 Crore, up 5.43 % from last quarter Total Income of Rs 1464.03 Crore and up 5.66 % from last year same quarter Total Income of Rs 1460.90 Crore. Company reported net profit after tax of Rs 132.39 Crore in latest quarter.

Investment Rationale
FSOL was faced with challenges in mortgages (22% of revenue) with 30- 40% declines expected ahead. Management expects stabilisation here by H2 FY23. In the other divisions (78% of revenue), the outlook is bright with BFS, telecoms and healthcare reporting growth. The company expects these divisions to deliver 18-22% growth in FY23, leading to overall 7-10% growth guidance. Q1 is guided to be soft; estimates are lowered ~5% and the target from Rs175 to Rs145 (15x FY24e EPS). The brokerage is yet find the ruling price attractive and upgrade the stock to a Buy.

Promoter/FII Holdings
Promoters held 53.66 per cent stake in the company as of 31-Mar-2022, while FIIs owned 7.79 per cent, DIIs 14.76 per cent.