Firstsource Solutions Q4 Review — Modest Growth Guidance, That Too Back-Ended, OPM Improving: Dolat Capital

Dolat Capital Report

Firstsource Solutions Ltd. reported growth of 3.8% QoQ in $ terms (our estimate: 2.2%) and 2.5% QoQ in constant currency led by growth in U.S. communication, media and technology, collections and diverse business (56% of Incremental revenue).

Operating profit margin rose by 220 basis points QoQ at 11.6% (our estimate: 11.4%), led by conscious reduction in costs (headcount down 2.6% QoQ, 13% YoY). Operating profit margin improved across segments.  Guided for 2-5% growth in revenues in CC terms with OPM of 11%-12%.

Firstsource Solutions' growth guidance is led by improved prospects for collections business and expected revival in provider business as U.S. has finally declared end of public health emergency effective May 11, which would drive eligibility services volumes apart from continued momentum in CMT (U.S.), banking, financial services in UK etc.

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