Firstsource Solutions hits over 9-month low; tanks 44% from 52-week high

Shares of Firstsource Solutions (FSL) continued to reel under pressure hitting an over nine-month low of Rs 135.70, down 4 per cent on the BSE in Wednesday’s intra-day trade in an otherwise firm market.

In comparison, the S&P BSE Sensex was up 0.67 per cent at 58,531 points at 01:52 pm. The stock has corrected 44 per cent from its 52-week high level of Rs 242.65 touched on July 19, 2021.

The company provides business process services to BFSI, communication, media, tech and healthcare. The company generates 70 per cent of its revenues from the US and 29 per cent from the UK.

In the past two weeks, the stock price of FSL has declined 19 per cent after the company lowered its FY22 revenue growth guidance.

It has revised downward revenue guidance of FY22 to 14-14.5 per cent (including acquisitions i.e. Stonehill and ARSI put together, organic revenue growth guidance of 10-11 per cent) vs organic revenue growth guidance of 15-18 per cent given in Q1 and 14-14.5 per cent revenue growth guidance (Including Stonehill) given in Q2.

In Q3FY22, FSL reported a 4.9 per cent YoY growth in revenue in CC terms, lowest in the past six quarters. Operating Ebitda contracted 40 bps to 16.3 per cent sequentially. The company indicated that the UK business was impacted for the quarter due to higher employee absence even in work from home due to Covid infections. The company expects a recovery in the March quarter (Q4).

FSL’s Q3 revenue performance was impacted by delay in the recovery of the provider business due to recent surge in Covid cases; lower-than-anticipated volumes in the collection business amid record-low delinquency rates; softness in the UK due to higher absenteeism amid the surge in Covid cases; and sharper than-anticipated decline in the Mortgage business due to aggressive tapering by the Federal Reserve and an uptick in interest rates, analysts at Emkay Global Financial Services said in a result update.