Firstsource Solutions (FSL) Q4 10/11 earnings summary

Executive summary

• FY2011 revenue from operations rose 4.3% to ₹20,552.8m; operating EBIT increased 5% to ₹1,941.2m and PAT rose 1.8% to ₹1,385.1m.

• Operations spanned 42 delivery centers in four countries, with 26,413 employees at year-end; 93.7% of service income came from existing clients.

• Strategic priorities included profitable growth, deeper industry expertise, cross-vertical Centers of Excellence, new client wins and expansion in domestic and emerging markets.

Financial highlights

• Consolidated revenue from operations was ₹20,552.8m, up 4.3% reported and 6.9% on a constant-currency basis; total income was ₹20,694.7m, up 3.9%.

• Operating EBITDA increased 4% to ₹2,832.0m; operating EBIT rose 5% to ₹1,941.2m. Profit before tax increased 9.4% to ₹1,753.0m and PAT rose 1.8% to ₹1,385.1m.

• Basic EPS was ₹3.22 versus ₹3.17; diluted EPS was ₹2.91 versus ₹2.84.

• Standalone income rose 5.4% to ₹7,198.0m, while standalone PAT declined 1.5% to ₹662.9m, mainly due to higher taxation.

Outlook and guidance

• Management prioritized profitable growth and sustainable positions in selected markets, supported by strategic review, new vision and values, and Centers of Excellence for client innovation.

• The global BPO market was forecast to reach USD 201bn in 2014, with 6.2% CAGR; the CEO cited a 6% 2010–14 market CAGR.

• US healthcare reform was expected to create payer and provider outsourcing opportunities as provisions take effect; India telecom stabilization was expected to support renewed growth.

• International telecom deal decisions were expected to normalize, with a robust pipeline across new and existing clients; BFSI deal activity was also expected to pick up.