About the stock: Firstsource Solutions (FSL) provides business process services to BFSI, communication, media, tech and healthcare. FSL is a domain driven BPM services company which has 200+ global clients, including several Fortune-500...

4QFY25 came in at the upper end of guidance. 15.6% YoY CC revenue organic growth in FY25 top quadrant performance

FSL is a domain driven BPM company, which has 150+ clients, including 17 Fortune 500 companies and nine FTSE 100 companies. The company has 27,398 employees across the US, UK, India and Philippines...

Improvement in provider, collection segment, diversification in CMT segment, new logo wins, focus on client mining cross selling of platforms business and hiring of leaders bodes well for long term revenue growth The company closed one large deal recently with a health insurance company, under which the company will replace with modern integrated software and services solutions The company faces high attrition, especially on the onshore side. Controlling the same can boost its financials...

In the current quarter, eClerx witnessed demand and supply side challenges. However, we believe the company could see improving revenue growth in coming quarters led by receding supply side challenges and improving demand. eClerx also witnessed healthy deal wins upwards of quarter million dollars. A few deal wins include a Nordic banking client, food business client and higher wins from existing clients. In addition, the company expects CLX business (that we believe contributes 18% to topline) to see improvement in coming quarters. Hence, we expect eClerx to witness a gradual...

In the near term, the company is expected to face a significant revenue impact due to some supply side challenges, lower demand, impact in voice and exposure to retail & travel vertical (that we believe together may account for 10% of revenues). As a result, we expect a sharp fall in Q1FY21E revenues. We expect the company to witness a marginal improvement from Q2FY21E onwards and to reach Q4FY20 revenues in Q4FY21E (as indicated by management). Based on our assumptions, we expect dollar revenues to decline 8.4% YoY in FY21E. However, we expect the company to witness an...

Revenues in the quarter were impacted by the Covid-19 pandemic. The company has indicated at supply side issues and client specific challenges impacting Q4FY20 revenues. In the near term, FSL expects pressure in healthcare business (due to lower elective surgeries & pricing pressure), challenges in top client (due to slowdown in UK economy) and seasonality in collections. Hence, we expect revenues to decline 10% QoQ in Q1FY21E with margins falling 200 bps. Going forward, we expect a gradual recovery in the collection business (led by higher origination business and higher...

In good times, the flexi staffing business model anyways benefits from outsourcing of non-core activities by clients to support their growth. The company indicated that key focus going forward will be on RoE improvement at contract/individual business unit level. CEOs of different segments will have RoE targets. Over time, the company intends to divest businesses that do not meet the RoE threshold, which we understand is 20%. At the company level, RoE of ~20% is aspired to be achieved by FY23. Strengthening governance, improving capital allocation and balance sheet lightening are the other key priorities of the new CEO. In general staffing, QUESS remains focused on volume growth through new client additions. Expanding bill rate model and enhancing sourcing channels are the key priorities in the Indian IT staffing business. Renewed sales engine, renewed focus on new acquisitions (enterprise, tech, SE Asia), rebuilding/modernizing talent, reinforcing performance culture and digital marketing are the key priorities in Monster.

4 November 2019 Revenue grew 26.7% YoY (7.3% beat) in 2QFY20. Excluding the impact from the accounting standard line), up 70bp YoY against the backdrop of the Allsec acquisition, improved efficiencies in IFM, and expansion in the margins of skill development and North America staffing operations. For 1HFY20, revenue/EBITDA/PAT were up 24%/44%/5% YoY. 23% YoY, majorly driven by strong headcount addition in the general staffing business. QUESS added 59,000 associates in 1H, which is significantly more than 35,000 in FY19. The company has been gaining market share aggressively despite increasing its collect and pay offerings (72% of business). QUESS has given a clarification on various issues that were increasing the risk profile for the company. Further, it has assured that the demerger of TCIL will complete by end-3QFY20, post which the public holding will increase by 44% (currently 28%) and QUESS will become a domestically owned company.

4QFY19 revenue grew 21.4% YoY (v/s est. +23%) to INR22.9b and EBITDA grew 20.5% YoY (v/s est. +18%) to INR1.3b. EBITDA margin expanded ~30bp QoQ to 5.7% (~20bp beat), despite an additional INR80-90m expenditure towards ad campaigns for Monster.com, implying an even better operating performance in the non-internet businesses. PAT declined 0.3% YoY to INR755m (v/s est. of 4% YoY decline). Organic growth in FY19 was driven by People and Services: In FY19, revenue/EBITDA/PBT was up 38.3%/31.1%/14.2% YoY, while PAT was down...

QUESS indicated that its single-point agenda is strong cash generation by improving the conversion cycle. Cash flow from operations (OCF) was INR530m in 3QFY19, as against INR390m in the previous quarter. Cash flow conversion (as a percentage of EBITDA) stood at 44% in 3QFY19 v/s 27% in FY18. Peoples Services the largest contributing segment (~45%) generates a healthy RoCE of 52%. This is dragged down by lower returns in technology solutions, facility management (FMS), industrials, and internet services. FMS RoCE is lower on account of the higher capital base resulting from the Manipal acquisition, excluding which, the RoCE for the segment stands at 21%. Internet services business is yet to turn profitable at the operating level due to higher investments required for sustainability. Profitability in industrial and internet segments is likely to improve over the medium-to-long term.