Firstsource Solutions (FSL) Q4 12/13 earnings summary

Executive summary

• FY13 marked a turnaround: revenue from operations rose 25.0% to ₹28,185.4 million and PAT increased 136.3% to ₹1,465.9 million.

• The USD 236.65 million FCCB maturity value was repaid in full; the RP-Sanjiv Goenka Group became the promoter with 56.86% ownership.

• Operational realignment, cost control and stronger delivery efficiency supported higher operating margins; management expected further improvement in FY14.

Financial highlights

• Income from services rose 26.1% to ₹28,440.2 million; revenue from operations increased 25.0% to ₹28,185.4 million, or 15% on a constant-currency basis.

• Consolidated PAT reached ₹1,465.9 million versus ₹620.3 million; PBT rose to ₹1,592.0 million from ₹759.8 million.

• Operating costs fell to 21.4% of income from 24.3%; personnel costs rose to 68.6% from 67.5%, partly reflecting higher UK and Europe onshore delivery.

• Operating cash flow was ₹1,992.8 million versus ₹56.8 million; cash and bank balances fell to ₹901.0 million from ₹6,828.7 million, primarily after FCCB repayment.

Outlook and guidance

• Management anticipated better FY14 performance and targeted higher operating margins through operational efficiency, innovation and profitable expansion.

• The strategy prioritised converting non-optimal customer accounts into profitable ones, improving resource utilisation and building service capabilities.

• US healthcare reforms were expected to create payer and provider opportunities as provisions took effect, some as late as 2014.