'Buy' This Stock For 22.2% Upside In 1 Year: Emkay Global

Target Price

The Current Market Price (CMP) of Firstsource (FSOL) is Rs. 180. The brokerage firm has estimated a Target Price for the stock at Rs. 220. Hence the stock is expected to give a 22.2% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 180
Target Price	Rs. 220
1 year return	22.20%

Company performance

In FY 22, Q2, the company's operating performance has missed expectations due to a ~5% miss on revenue, that fell 4.1% QoQ. EBITM expanded by 40 bps QoQ to 12.5%. However, FSOL cut its FY22 revenue growth guidance to 14.5-15.5% CC YoY. It retained the EBITM guidance range of 11.8-12.3%, while its healthcare revenues increased by 6.3% QoQ, led by solid momentum in the HPHS business. BFS dropped by 9.3% QoQ due to weakness in mortgage and collection.

 

Comments by Emkay Global

However, Emkay Global liked that the company reported, "Strong growth in the HPHS business, a large deal won in HPHS, healthy cash conversion, 15 new clients added."

The brokerage firm also added, "We cut FY22-24E EPS by 0.4-0.9%, factoring in the Q2 miss and TSG acquisition. The stock has corrected 15%/5% in last 1M/3M. In our view, the performance miss was largely due to temporary factors, and growth should bounce back strongly from Q4FY22. The stock may consolidate in the near term due to the lack of immediate catalysts. Considering attractive valuations, we upgrade FSOL to Buy with a TP of Rs. 220 at 21x Sept'23E EPS."

About the company

Firstsource, a part of the RP-Sanjiv Goenka Group, is a provider of business process solutions to more than 100 global businesses in the Banking and Financial Services, Healthcare, Communications, Media and Technology, and diversified industries.

Disclaimer

The above stock has been picked from the brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.