Firstsource Solutions share has more than tripled investors' wealth during the last six months. The stock of the ITES firm gained 269% during the coronavirus crisis and the ensuing market crash since March this year. The mid cap share rose from Rs 20.65 on March 24 this year to Rs 76.20 on September 21. During the same period, Sensex gained 11,360 points or 42.58% from 26,674 on March 24 to 38,034 on September 21 this year.
Big Bull Rakesh Jhunjhunwala held 2.88% or 2 crore shares of the firm for the quarter ended June. He raised his stake in the June quarter after the stock fell due to coronavirus pandemic. Jhunjhunwala held 1.43 crore shares or 2.06% stake in the March quarter. Jhunjhunwala first bought 2.5 crore shares representing 3.8% stake in the company in July 2013.
Firstsource Solutions share hit its 52-week low on March 24 as Indian market was roiled by the impact of rising coronavirus cases on the global economy. During the short period of six months, Firstsource Solutions share touched 52 week of Rs 76.20 from Rs 20.65, the scrip's yearly low.
An investment of Rs 1 lakh in Firstsource Solutions share on March 24 would have grown to Rs 3.69 lakh on September 21.
Steady financial performance of the firm during the lockdown caused by the coronavirus pandemic likely contributed to growth of the stock.
The firm reported a mere 2.76% fall in Q1 net profit to Rs 88.68 crore against profit of Rs 91.18 crore in Q1 of last fiscal.
In Q4 of last fiscal, the technology firm reported a marginal fall in net profit to Rs 92 crore against Rs 98 crore net profit in Q4 of 2018-19. However on a quarter-on-quarter basis, net profit rose compared to Rs 90 crore profit in Q3 of last fiscal.
Sales rose 9.86% to Rs 1,062 crore in Q1 against Rs 966.88 crore in first quarter of last fiscal.
EBIT fell marginally to Rs 116 crore in Q1 compared to Rs 117 crore in the March quarter of previous fiscal.
Emkay Global has raised its target price from Rs 40 per share to Rs 90 following a significant increase in revenue and margin assumptions in Q1. The brokerage upgraded Firstsource Solutions to buy with a revised target price of Rs 90 (from Rs40), based on 12 times September '22E EPS.
Firstsource Solutions' competitors are Oracle Financial Services, Mphasis , L&T Technology, Hexaware Tech, NIIT Tech and Persistent Systems. For quarter ended June, promoters held 53.9% stake and FIIs owned 7.64% stake. Public shareholders owned 44.11% stake.
Firstsource Solutions share ended 0.91% higher at Rs 72.15 against previous close of Rs 71.50 today.
Share price of Firstsource Solutions has gained 35% in the last one year and risen 76% since the beginning of this year.
The small cap share has gained 20.92% in one month. Total 3.15 lakh shares changed hands amounting to turnover of Rs 2.21 crore on BSE.
Market cap of the firm stood at Rs 5,011 crore today.
The firm has a price to earnings ratio of 14.73 compared to industry PE of 12.38. On the other hand, its peer Oracle Financial Services has PE ratio of 16.66. PE ratio is calculated by dividing the market price of a share by earnings per share. If a stock has PE ratio of 25, it means one needs to invest Rs 25 in the share to earn Rs 1.
Firstsource Solutions has a price to book ratio of 1.80 compared to P/B ratio of 3.97 for Oracle Financial Services. P/B ratio compares the price of stock (market value) to its book (accounting value).
Ideally, price to book value of a stock should be higher than 1 but lesser than 3. A stock having book value higher than 1 is considered overvalued and conveys that the market is willing to pay more than each rupee of book value.
Firstsource Solutions seems undervalued in comparison to Oracle Financial Services when it comes to its price to book value. Book value of a company is measured by the difference between total assets and external liabilities.
Debt to equity ratio of the firm stands at a comfortable 0.42 against -0.67 for Oracle Financial Services. Debt to equity ratio of more than 1.5 signals that the company may not be able to generate enough cash to satisfy its debt obligations.
Firstsource Solutions is a provider of a range of business process management services across the customer life cycle delivered through transaction processing. The company's segments include banking, financial services and insurance and non-banking, financial services and insurance.
Its geographic segments include USA and Canada, UK, India and Rest of the world. It is involved in information technology-enabled services, including business process outsourcing.