Shares of Firstsource Solutions rallied more than 16% on May 8, extending their three-day post-Q4 results rally to nearly 24%, as investors cheered the company’s strong earnings and upbeat medium-term growth outlook.
As of 12:37 PM, the stock was trading near the day’s high of Rs 278.22 after opening at Rs 235.18 against the previous close of Rs 235.18. The stock touched an intraday low of Rs 234.01, while live trading volume crossed 6.23 crore shares.
The rally came after the company reported a solid performance for the March quarter. Net profit rose 28% year-on-year to Rs 205 crore, while revenue increased 20% YoY to Rs 2,583 crore.
Domestic brokerage JM Financial maintained its ‘BUY’ rating on the stock and raised the target price to Rs 290 from Rs 260, citing improving growth visibility despite a softer operating environment.
According to the brokerage, revenue growth and margins were slightly below expectations but broadly in line with consensus estimates. Revenue grew 3% quarter-on-quarter in constant currency terms, impacted by delays in the UK collections deal ramp-up due to regulatory approvals and slower ramp-up at payer clients linked to Medicare payment timelines.
EBIT margin for the quarter came in at 12.2%, marginally below the brokerage estimate of 12.4%.
JM Financial noted that most revenue headwinds seen in the fourth quarter are now behind the company, which could support stronger growth momentum in FY27. The brokerage also highlighted that Firstsource has retained its medium-term aspiration of delivering double-digit constant currency revenue growth.
The brokerage revised its FY27 and FY28 earnings estimates by 1%-3% following the Q4 results and rolled forward its valuation to FY28 earnings, while maintaining an 18x target multiple.