Firstsource Solutions Q2 Review -Mortgage Slowdown, Weak Macros Drive Guidance Cut: Dolat Capital

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Dolat Capital Report

Firstsource Solutions Ltd. reported revenue decline of 4.0% in constant currency terms largely led by softness in banking financial services and insurance vertical (down 9.2% QoQ) and top client (down 7.1% QoQ).

Operating profit margin improved by 42 basis points QoQ at 12.5% on favorable revenue mix (healthcare rev up 6% QoQ).

Firstsource Solutions has cut its revenue growth guidance to 14.5%-15.5% (includes 60- 70 basis points from StoneHill acquisition) from 15% to 18% in CC terms.

The cut is largely due to softness in mortgage biz (slowdown in re-financing volumes) while healthcare outlook is positive.

Operating profit margin band is retained at 11.8%-12.3% as it expects limited impact from supply side in India. 

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