Reduce Firstsource Solutions; target of Rs 350: Emkay Global Financial

Emkay Global Financial' research report on Firstsource Solutions

We attended RPSG Group’s ‘Investor Day’, to understand Firstsource Solutions (FSOL)’s growth strategy and outlook. KTAs: 1) FSOL’s growth strategy encompassing the ‘OneFirstsource’ framework with focus on seven strategic levers and its UnBPO approach (shifts focus from labor arbitrage to tech arbitrage) has started yielding early results, as reflected in the revenue growth acceleration, deal intake, and pipeline (deal-win ACV up 60% YoY in FY25; exit deal pipeline up 30%), progress across client buckets, and quality of the new logos added. 2) The management reiterated its guidance of 13-15% CC revenue growth (ex PDC, pending closure) and 11.25-12% EBITM for FY26. 3) It indicated that the ‘UnBPO’ approach unlocks a ~7x larger addressable market. 4) Steadfast execution on the ‘OneFirstsource’ framework coupled with initial traction in the UnBPO approach instills confidence in the management toward sustaining double-digit revenue growth momentum over the medium term. 5) The management expects 50-75bps EBITM expansion per annum in the medium term.

Outlook

We retain REDUCE on FSOL and TP of Rs350, at 25x Jun-27E EPS.

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Firstsource Solutions - 09092025 - emkay