Firstsource Solutions Analysis

dividend

Pros

• Dividends paid are covered by earnings (2x coverage).
• Dividends after 3 years are expected to be well covered by earnings (2.1x coverage).
• Firstsource Solutions's pays a higher dividend yield than the bottom 25% of dividend payers in India (0.76%).
• Firstsource Solutions's dividend is above the markets top 25% of dividend payers in India (3.08%).

Cons

• Dividend payments have increased, but Firstsource Solutions only paid a dividend in the past 2 years.
• Whilst dividend payments have been stable, Firstsource Solutions has been paying a dividend for less than 10 years.

future

Pros

Cons

• Cash flow for Firstsource Solutions is expected to increase but not above the 50% threshold in 2 years time.
• Firstsource Solutions's earnings are expected to grow by 4.3% yearly, however this is not considered high growth (20% yearly).
• Firstsource Solutions's earnings growth is positive but not above the India market average.
• Firstsource Solutions's earnings growth is positive but not above the low risk savings rate of 7.2%.
• Firstsource Solutions's earnings are expected to decrease over the next year.
• Firstsource Solutions's net income is expected to increase but not above the 50% threshold in 2 years time.
• Firstsource Solutions is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).
• Performance (ROE) is not expected to exceed the current IN IT industry average.
• A decline in Firstsource Solutions's performance (ROE) is expected over the next 3 years.
• Firstsource Solutions's revenue is expected to increase but not above the 50% threshold in 2 years time.
• Firstsource Solutions's revenue is expected to grow by 7% yearly, however this is not considered high growth (20% yearly).
• Firstsource Solutions's revenue growth is positive but not above the India market average.

health

Pros

• Firstsource Solutions is profitable, therefore cash runway is not a concern.
• Firstsource Solutions is profitable, therefore cash runway is not a concern.
• Debt is well covered by operating cash flow (49%, greater than 20% of total debt).
• Debt is covered by short term assets, assets are 1.3x debt.
• Firstsource Solutions's cash and other short term assets cover its long term commitments.
• The level of debt compared to net worth has been reduced over the past 5 years (50.1% vs 30.3% today).
• Interest payments on debt are well covered by earnings (EBIT is 7.6x coverage).
• Firstsource Solutions's level of debt (30.3%) compared to net worth is satisfactory (less than 40%).
• Low level of unsold assets.

Cons

• Firstsource Solutions's short term (1 year) commitments are greater than its holdings of cash and other short term assets.

management

Pros

• The tenure for the Firstsource Solutions board of directors is about average.
• The tenure for the Firstsource Solutions management team is about average.

Cons

misc

Pros

Cons

• Firstsource Solutions is covered by less than 3 analysts.
• Firstsource Solutions has significant price volatility in the past 3 months.

past

Pros

• Firstsource Solutions's year on year earnings growth rate has been positive over the past 5 years.
• Firstsource Solutions used its assets more efficiently than the IN IT industry average last year based on Return on Assets.

Cons

• Firstsource Solutions's 1-year earnings growth is negative, it can't be compared to the 5-year average.
• Firstsource Solutions's use of capital deteriorated last year versus 3 years ago (Return on Capital Employed).
• Firstsource Solutions has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).
• Firstsource Solutions's 1-year earnings growth is negative, it can't be compared to the IN IT industry average.

value

Pros

• Firstsource Solutions's share price is below the future cash flow value, and at a moderate discount (> 20%).
• Firstsource Solutions is good value based on earnings compared to the IN IT industry average.
• Firstsource Solutions is good value based on earnings compared to the India market.
• NSEI:FSL is up 25.2% outperforming the IT industry which returned 8.5% over the past month.
• NSEI:FSL is up 25.2% outperforming the market in India which returned 8% over the past month.

Cons

• Firstsource Solutions's share price is below the future cash flow value, but not at a substantial discount (< 40%).
• Firstsource Solutions is overvalued based on assets compared to the IN IT industry average.
• Firstsource Solutions is poor value based on expected growth next year.
• FSL underperformed the IT industry which returned -10.1% over the past year.
• FSL underperformed the Market in India which returned -14.5% over the past year.