Firstsource Solutions jumps 16% to hit new high; stock zooms 48% in 4 days

On December 23, Firstsource Solutions announced that the firm has acquired PatientMatters, a healthcare Revenue Cycle Management (RCM) solutions provider

Shares of Firstsource Solutions rallied 16 per cent to hit a fresh record high of Rs 106.40 on the BSE on Monday on the back of heavy volumes.  The stock of the global provider of Business Process Management (BPM) services has zoomed 48 per cent in the past four trading sessions. On Thursday, the stock hit an intra-day high of Rs 94, surpassing its previous high of Rs 93, touched on May 15, 2007.

The trading volumes on the counter more-than-doubled with a combined 10.65 million equity shares, representing 1.5 per cent of the total equity of Firstsource Solutions, changing hands on the NSE and BSE, till 09:48 am. In comparison, the S&P BSE Sensex was up 0.64 per cent at 47,273 points.

Ace investor Rakesh Jhunjhunwala held 20 million shares or 2.88 per cent stake in Firstsource Solutions as on September 30, 2020, the shareholding pattern data show.

On Wednesday, December 23, Firstsource Solutions announced that the firm has acquired PatientMatters, a healthcare Revenue Cycle Management (RCM) solutions provider.

PatientMatters unifies disparate registration, bill estimation, and financial services with intelligent workflows and eligibility services, improving revenue realization for hospitals. 
 

The acquisition complements Firstsource’s provider business on two dimensions: strengthening presence in large markets like Texas and New York and adding new capabilities of pre-authorization and patient bill estimation at the front-end of the RCM cycle, the company said.

Meanwhile, while announcing its September quarter results in October, Firstsource Solutions upped its FY21 revenue growth guidance to 9-12 per cent YoY CC (earlier 6- 10 per cent) and retained EBITM guidance of 11-11.5 per cent. Revenue guidance implies a 1.7-5.2 per cent CQGR in H2. Management attributed the wide guidance range to uncertainties over the health crisis. 
 

Analysts at Emkay Global Financial Services believe that increase in revenue growth, delivery on guidance and strong cash generation would support high valuations.
 

Low-interest rates in the US should drive refinance volumes and new home sales in the foreseeable future, which should augur well for Firstsource Solution given its comprehensive offerings in BFSI, the brokerage said in result update. 
 

"We believe that anticipated acceleration in revenue growth momentum, stability in margins, strong consistent execution, delivery on guidance and strong cash generation would support high valuations," it added.