Firstsource Solutions (FSL) Q4 06/07 earnings summary

Executive summary

• FY07 consolidated revenue rose 52.8% YoY to Rs 8,399.3 million; EBITDA reached Rs 1,745.5 million and net profit Rs 972.5 million.

• Growth combined expansion from existing clients with acquisitions, new delivery locations and entry into domestic BPO; the IPO was completed in February 2007.

• Strategic priorities: deepen domain expertise in BFSI, telecom and media, and healthcare; grow client relationships; and maintain a global onshore, nearshore and offshore delivery model.

Financial highlights

• Consolidated income increased 52.8% YoY to Rs 8,399.3 million; income from services rose 48.9% to Rs 8,168.5 million.

• Consolidated PBT increased 280.7% to Rs 1,026.4 million; net profit rose 294.2% to Rs 972.5 million from Rs 246.7 million.

• Standalone revenue rose 34.3% to Rs 4,392.7 million; PBT was Rs 762.6 million and PAT Rs 742.8 million.

• Operating profit before interest and depreciation was Rs 1,745.5 million, versus Rs 806.3 million in FY06.

• Consolidated basic and diluted EPS were Rs 3.67 and Rs 2.50, versus Rs 1.23 and Rs 0.80 in FY06.

Outlook and guidance

• Strategic aim: sustain a leading position in offshore BPO through service expansion, cross-selling, client growth, process excellence and selective acquisitions and partnerships.

• Planned to bring new delivery centres in Hubli, India, and the Philippines into operation in early FY08.

• Management cited a global offshore BPO market potential of US$120–150 billion and forecast industry growth to US$55 billion by 2010, based on the cited NASSCOM-McKinsey estimate.