Firstsource Solutions Limited

Technology — Information Technology Services · NSE

₹281.90+₹0.15 (+0.05%)

DalalBaazaar Score

62 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by short-term liabilities exceed short-term assets, small-cap size, which brings sharper price swings, falling profits.

In simple words: Strong business and financial position, though profits are falling even as sales grow. Short-term liquidity is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:44 pm

Understanding the Business

Company site ↗

The 60-second version of Firstsource Solutions Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Firstsource Solutions Limited provides technology-enabled business process services in Asia, the United Kingdom, the United States, and internationally.

IndustryInformation Technology Services

SectorTechnology

Employees36,875

Annual revenue₹9,616 Cr

How does it make money?

Turns over ₹9,616 Cr a year. Of every ₹100 of sales, about ₹7 reaches shareholders as profit, with ₹17 left at the operating level before interest, tax and depreciation. Each of its 36,875 employees supports ₹26.1 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹26.1 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 17.7% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE32.0%

What is the outlook?

14 analysts covering the stock expect revenue to grow about 11.0% and earnings to grow about 19.7% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+11.0%

Est. earnings growth+19.7%

Analysts14

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +61% while net margin moved -18% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+61%

Margin effect-18%

DalalBaazaar Score

62/ 100

Good

Weighted across six categories. Every point is explained below.

• P/E of 29.6x already prices in growth
• P/E is close to its own historical median of 35.9x

Quality vs. Valuation

Company Quality

63/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

45/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

29.6x

3Y Median

35.9x

40 monthly readings · mean 35.2x · range 21.3x–51.2x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 17% below its 3y median of 35.9x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 79% above the peer median of 16.5x.

vs. its own history

Fair

35.9x median over 40 months · -17%

vs. sector peers

Expensive

16.5x median of 4 peers · +79%

vs. generic bands

Fair

15x–35x

EV/EBITDA

14.1x

PEG

3.12

What's Good / What's Bad

🟢 What's Going Well2

Cash generation is improving
Free cash flow is up 37% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

3 items require attention · 1 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 110% over 3 years, from ₹1,393 Cr to ₹2,922 Cr.
🟡Receivables growing faster than salesFinancial
Receivables up 93% against revenue up 61% — sales are being booked faster than they are collected.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.79 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 93% against revenue up 61%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 79% above the peer median. That premium needs a reason that persists, or it closes.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 13% a year✓ 17.1% CAGR
Latest reported year was 22.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 15%✓ 16.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹1,018 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 15%✓ 17.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 5 neutral · 1 weak

Market Cap

₹19,504 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

29.6x

Fair

Fairly valued against the generic band

P/B Ratio

4.44x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹9.52

Profitable

Profitable on a per-share basis

ROE

15.4%

Strong

Strong capital efficiency

ROCE

17.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.67x

Moderate

Moderate leverage

Revenue Growth (YoY)

22.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-1.7%

Falling

Profits are shrinking

Dividend Yield

1.95%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹1,018 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

17.6x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

12.4%

Average

Average margins

Net Margin

6.7%

Average

Average bottom-line conversion

Current Ratio

0.79

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.19

Defensive

Steadier than the market

52W Range Position

47%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

267.3 / 268.7

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

64.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹5,986 Cr	₹6,333 Cr	₹7,972 Cr	₹9,616 Cr	+17.1%
EBITDA	₹953 Cr	₹993 Cr	₹1,233 Cr	₹1,589 Cr	+18.6%
EBITDA Margin	15.9%	15.7%	15.5%	16.5%	—
PAT (Net Profit)	₹514 Cr	₹515 Cr	₹594 Cr	₹674 Cr	+9.5%
EPS	₹7.32	₹7.34	₹8.42	₹9.56	+9.3%
ROE	15.3%	13.9%	14.5%	15.4%	—
ROCE	16.9%	16.5%	16.2%	17.7%	—
Total Debt	₹1,393 Cr	₹1,526 Cr	₹2,569 Cr	₹2,922 Cr	+28.0%
Free Cash Flow	₹741 Cr	₹559 Cr	₹460 Cr	₹1,018 Cr	+11.2%

🟢 Revenue has grown at 17.1% a year over 3 years.

🟢 EBITDA has grown at 18.6% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 16.5% over 3 years.

🟢 PAT (Net Profit) has grown at 9.5% a year over 3 years.

🟢 EPS has grown at 9.3% a year over 3 years.

🟡 ROE has held roughly flat at 15.4% over 3 years.

🟡 ROCE has held roughly flat at 17.7% over 3 years.

🔴 Total Debt has grown at 28.0% a year over 3 years.

🟢 Free Cash Flow has grown at 11.2% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹9,320 Cr

Total Liabilities

₹4,935 Cr

Cash & Equivalents

₹35 Cr

Operating Cash Flow

₹1,214 Cr

Capex

-₹196 Cr

Shareholding (proxy)

Institutional Holding

31.4%

Insider Holding

54.9%

Corporate Actions

Dividend Rate

₹5.5

Ex-Dividend Date

20 Feb 2026

Analyst Consensus

Recommendations

11 Buy · 0 Hold · 4 Sell

Target Price (Mean)

₹308.2

+9.3% vs CMP

Target Range

₹225 – ₹350

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

6 mixed

Firstsource Solutions Share Price News: FSL Gains Today

Univest, 17 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Firstsource Solutions (NSEI:FSL) Stock Forecast & Analyst Predictions

Simply Wall Street, 09 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Firstsource Solutions share price jumps 9% with volume surging 2 times - Experts highlight key levels to watch

TradingView, 30 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Firstsource Solutions share price jumps 9% with volume surging 2 times - Experts highlight key levels to watch

Livemint, 30 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Firstsource tanks 16% in 2 days after Q1 show; brokerages mixed on outlook

Business Standard, 07 AugResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Firstsource Solutions Share Price Falls 2.08% Today

Univest, 15 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongProfitability · Risk

MiddlingBusiness Quality · Financial Health · Growth · Valuation

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 1 high-severity red flag sits above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑