Target: ₹415
CMP: ₹305.05
Firstsource Solutions Ltd (FSL) continued to deliver a strong performance in Q3FY26 with CC revenue rising by 4.6 per cent q-o-q and 10.6 per cent y-o-y (8.6 per cent y-o-y in organic CC). EBIT margin rose 120 bps q-o-q to 12.8 per cent (excluding other operating income), aided by execution, due to an accelerated move towards offshore/nearshore delivery (43.4 per cent; + 180 bps q-o-q); and mix (active pruning of low-margin/low-growth payer accounts).
Telecom and the UK with contribution from PastDue acquisition led growth among verticals and geographies, respectively. Demand remained solution-led with the clients prioritising compliance, customer experience (CX) and cost takeout. Deal momentum (pipeline of over $1 billion) remained healthy with five large deals (annual contract value of over $5 million) and new logo wins across CX/onboarding/account servicing and operations outsourcing, reinforcing demand for its differentiated commercial constructs.
About 80 per cent of gross hiring is now happening offshore/nearshore with the mix is expected to improve further.
At CMP, the stock trades at FY27/28e P/E of 23.4/20.2x. We maintain Buy rating on the stock with a 12-month target price of ₹415.
Key Risks: Weakness in UK demand environment and delay in ramp-up of large HLS win.
Published on February 4, 2026
