Firstsource Solutions Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Firstsource Solutions Ltd trades at ₹302, in a downtrend and 28 weeks into that stage. That is +9.9% against its own 200-day average. It sits at 56% of a 52-week range of ₹209 to ₹376. On relative strength it has been ahead of the NIFTY 500 on a trailing-13-week view for 1 straight week.

Today the stock is in a downtrend — week 28 of stage 4, confirmed. At ₹302 it trades +9.9% versus its 200-day average and sits at 56% of its 52-week range (₹209–₹376).

Against the market, two honest reads. Cumulative: over the last 10.4 years the stock moved +766% while the NIFTY 500 moved +276% — ahead of the index over the full window. Recent form: on a trailing-13-week view the stock has been ahead for 1 straight week — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Valuation P/E is the price of ₹1 of annual profit: how many rupees the market pays for each rupee the company earns in a year.

Firstsource Solutions Ltd trades at 28.6× P/E, at the pricey end of its own range (82nd percentile). Its long-run median P/E is 15.2×, measured across 10.4 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/E of 28.6× is at the pricey end of its own range (82nd percentile), against a long-run median of 15.2× measured over 10.4 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

Why the multiple sits where it does: over the past year annual EPS moved +13.4% against a −10.9% price move — earnings outran the price, pushing the multiple DOWN its own range.

The price move, decomposed: over 5y, of the +9.2%/yr price move, ~+9.2%/yr came from earnings growth and ~+0.0 pp from the multiple (roughly flat); over 10y, of the +20.6%/yr price move, ~+9.9%/yr came from earnings growth and ~+10.7 pp from the multiple (expanding). The split is the honest approximate (price return minus earnings growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is full against its own past, so the story rests on the earnings line underneath it, not the multiple.

Stage: Consistent Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Firstsource Solutions Ltd reads as consistent on its fundamental arc. Consistent — revenue, profit and EPS growth have stayed positive through the window, with ROCE at 18.2% and holding. The read is built from 12 quarters across 4 curves, on full evidence.

Why it matters: steady curves with healthy returns are the compounding setup — the risk is the price, not the business.

4-Factor Sector Score

68.7/100 — rank 2 of 12 in IT Enabled Services · 96% evidence confidence

Firstsource Solutions Ltd scores 68.7 out of 100 against the 12 companies it is compared with in IT Enabled Services, ranking 2. Confirmed research leader: earnings, capital efficiency and relative strength agree. Move to management, catalyst and risk diligence.

The four contributions add to the total exactly: 23 + 17.9 + 12.4 + 15.4 = 68.7. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if profit growth turns negative or margin improvement reverses while sector-relative strength deteriorates.

Revenue Revenue is the top line: everything the company billed its customers in the period.

Firstsource Solutions Ltd reported ₹2,583 Cr of revenue in the Mar 26 quarter, +19.5% year on year. That is the 12th straight quarter of year-on-year growth. Over 10 years it has compounded at 11.5% a year. The last full year, FY26, came in at ₹9,556 Cr. The last four reported quarters add to ₹9,556 Cr.

FY26 revenue came in at ₹9,556 Cr (+19.7% on the year), capping 10 years at 11.5% compound. The latest quarter (Mar 26) printed ₹2,583 Cr, +19.5% year on year — the 12th consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +19.9% growth against the decade's 11.5% — the current year is running faster than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +19.8% over the last 4 quarters against +22.8%/yr over the last 8 — stabilising; TTM profit +13.5% vs +14.3%/yr — stabilising.

Operating margin Operating margin is what is left of every ₹100 of sales after running the business, before interest and tax. It is the cleanest read on pricing power and cost control.

Firstsource Solutions Ltd's operating margin is 17.0% in the Mar 26 quarter, +2.0 percentage points against the same quarter a year ago. That is the widest this company has ever printed on a full-year basis. Across 13 fiscal years the operating margin has ranged 12.0% to 17.0%. The current quarter sits inside that band.

The latest quarter's operating margin is 17.0%, +2.0 pp against the same quarter a year ago. Across 13 fiscal years the operating margin has ranged 12.0%–17.0%, and FY26's 17.0% is the top of that band — a record year.

Why the margin moved: operating margin went +1.3 pp year on year while gross margin went +0.0 pp — the gain came mostly below the gross line: operating leverage, with costs spread over a bigger revenue base.

Worth repeating from the valuation section: cheap against its own history on record margins is not the same thing as cheap — a record margin flatters every ratio built on top of it.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Firstsource Solutions Ltd earned ₹205 Cr of net profit in the Mar 26 quarter, +27.3% year on year. Full-year FY26 profit was ₹674 Cr. The 10-year compound rate is 10.0%. That is 7.9% of the quarter's revenue. The same quarter a year earlier earned ₹161 Cr.

Mar 26 profit was ₹205 Cr, +27.3% year on year. On the full year, FY26 printed ₹674 Cr (+13.5%), and the 10-year compound rate is 10.0%.

Why profit moved: revenue contributed +19.5% and the margin +2.0 pp — the quarter was margin-led: most of the profit growth came from keeping more of each sale.

Pace comparison, last four quarters: profit +14.5% vs revenue +19.9%. Profit is growing slower than sales — costs are eating the growth before it reaches the bottom line.

Cash flow — the router The P&L says what was earned; the cash-flow statement says what actually arrived. Operating cash flow (CFO) against profit is the cleanest lie detector in the accounts.

Over the last 3 fiscal years 144% of Firstsource Solutions Ltd's reported profit arrived as operating cash — the cash follows the profit. In FY26 that was ₹1,214 Cr of operating cash against ₹674 Cr of profit. After ₹988 Cr of capital spending, ₹226 Cr was left as free cash.

FY26: operating cash of ₹1,214 Cr against reported profit of ₹674 Cr, leaving free cash of ₹226 Cr after ₹988 Cr of capital spending. Across the last 3 fiscal years the conversion rate is 144% of profit.

Cash-flow readings here are annual — that is the resolution our series carries, so this section moves once a year.

Why conversion sits at 144%: the cash cycle stretched 18 days between FY21 and FY26 — more of each rupee of profit waits inside the cycle before arriving.

Router verdict: the bigger cash user is investment — capital spending ran 2.8× depreciation over three years, so the next section's job is to check what that build-out is buying.

Where the cash goes Working capital is the cash tied up between paying suppliers and getting paid: debtor days (customers owe), inventory days (stock waits), and the cash conversion cycle (the whole loop, in days of sales).

Firstsource Solutions Ltd's cash conversion cycle runs 79 days in FY26, up from 61 days in FY21. Capital spending ran ₹2,899 Cr over the last 3 years. At FY26 sales of ₹9,556 Cr each day of that cycle holds about ₹26.2 Cr, so roughly ₹2,068 Cr sits inside the business at any moment.

FY26: debtors at 79 days (an asset-light business — no inventory to speak of) — for a full cycle of 79 days, looser than FY21's 61.

In money terms: at FY26 sales of ₹9,556 Cr, each day of the cycle holds about ₹26.2 Cr — so the 79-day loop keeps roughly ₹2,068 Cr sitting inside the business at any moment.

On the investment side: capital spending of ₹2,899 Cr over the last 3 fiscal years against ₹1,021 Cr of depreciation — the company is building well ahead of wear-and-tear. Capital work-in-progress stands at ₹30.0 Cr (FY26) — capacity paid for but not yet earning.

The synthesis: the cash is going into capacity, not disappearing into the cycle — the question becomes whether the new capacity earns.

Return on capital Return on capital employed (ROCE) is the profit the whole business earns on all the money in it — equity and debt together. It is the single best test of whether growth creates value or just size.

Firstsource Solutions Ltd earns a ROCE of 17% in FY26. That is up from a trough of 9% in FY14. Return on invested capital clears the cost of that capital by +1.2 percentage points, so growth here adds value rather than only size. The wiring behind it is 7.1% net margin on 1.05× asset turns.

FY26 ROCE is 17%, recovered from a FY14 trough of 9% — the full ladder below shows the fall and the climb, undoctored.

Why the return is what it is — the wiring (FY26): 7.1% net margin × 1.05× asset turns × 2.08× balance-sheet leverage ≈ 15.5% on equity. Margin does its share; leverage is a meaningful part of the equation.

The capstone test — ROIC − WACC: 13.2% − 12.0% = a +1.2 pp spread. The 12.0% is a standing assumption for the cost of capital in India, not a per-stock estimate — read the sign and the size of the spread, not the decimals. Positive but thin — value creation with little room for error.

Debt Debt-to-equity says how much of the business is funded by borrowings. Low is the safe corner; the trend matters as much as the level.

Firstsource Solutions Ltd carries total debt of ₹2,944 Cr against shareholder equity of ₹4,385 Cr as of Mar 26, a debt-to-equity of 0.67. On the annual view that ratio went from 0.60 in FY22 to 0.67 in FY26. Read the returns elsewhere on this page with that leverage in mind.

Mar 26: total debt of ₹2,944 Cr against shareholder equity of ₹4,385 Cr — a debt-to-equity of 0.67. On the annual view, debt-to-equity went from 0.60 (FY22) to 0.67 (FY26). Read the returns on this page with that leverage in mind.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Domestic institutions added 5.9 points of Firstsource Solutions Ltd over 8 quarters, the biggest move on the register. That takes domestic institutions to 25.4% of the company. Foreign institutions moved −1.0 points over the same window, to 8.4%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Domestic institutions: +5.9 points over 8 quarters to 25.4%; Foreign institutions: −1.0 points over 8 quarters to 8.4%; Promoters: +0.0 points over 8 quarters to 53.7%.

Why the register moved: domestic institutions drove it (+5.9 points), absorbed on the other side by foreign institutions (−1.0 points) — steady accumulation by institutions reading the same numbers this page reads.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Firstsource Solutions Ltd: the Z-score reads 4.52. A Z-score above roughly 3 reads as safe and below roughly 1.8 as the distress zone, so this sits well clear of distress. It is a distance-to-distress estimate from the balance sheet, not a forecast of failure.

Why it matters: a Z-score of 4.52 sits well clear of the distress zone — the balance sheet is not the risk here.

The safety line in one sentence: the Z-score reads 4.52.

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