Firstsource Solutions Ltd

Meeting Details

• August 26, 2026; One-on-One, Physical with PL Capital; KMPs to discuss public developments; no unpublished price-sensitive information.

Financial Performance

• Q1 FY27 revenue INR27.2 billion, up 22.9% YoY and 5.5% QoQ; US$288 million.
• Constant currency revenue grew 12.3% YoY and 2.2% QoQ.
• EBIT margin 12.4%, up 110 bps YoY and 20 bps QoQ.
• Adjusted PAT INR2.2 billion, 8.2% of revenue; +31.2% YoY.
• One-time charges total INR717 million pre-tax; breakdown: INR357m healthcare; INR284m indemnification; INR76m ASCENSOS.
• Reported PAT was INR1.7 billion after these items.
• Tax rate ~23%; MAT credit; cash taxes 22–24%.
• Cash and bank balances INR3 billion; net debt INR17.1 billion.
• Normalized DSO 67–69 days; FCF to PAT ~94%.
• Hedge book: GBP61.6m for 12 months at 118–120; USD119m at 92.7.

Geography & Vertical Update

• BFS grew 14% YoY, 5% QoQ in CC; five new logos.
• Healthcare revenue up 11% YoY, down 2% QoQ CC; four new logos.
• CMT revenues up 6% YoY, 9% QoQ; two new logos.
• North America +8% YoY; Europe +18% YoY, +6% QoQ; Australia strong; UK Glasgow office.
• Pipeline exited with a well-qualified mix across utilities and retail.

Outlook and Guidance

• FY27 constant currency revenue growth 10%–13%.
• EBIT margin guidance 12.25%–12.75%.
• Guidance unchanged despite 1%–1.5% healthcare BPaaS wind-down.

Q&A Highlights

• Healthcare BPaaS wind-down expected 1–1.5% revenue hit; pipeline offset supports guidance.
• 271m after-tax charge relates to healthcare program termination; recoveries pursued from client and partners.
• 284m pre-tax indemnification; insurance recovery being pursued.
• 76m Ascensos contingent consideration fair value adjustment; positive due to performance.
• Mortgage language model adopted across clients; 200+ document scenarios; reduces costs.
• Second-half revenue ramp expected; pipeline remains robust.

Partnership overview

• Firstsource and Cresta announce a strategic partnership to deliver integrated AI-powered CX transformation.
• Cresta's platform offers AI agents, agentic augmentation, and conversation intelligence for customer interactions.
• Firstsource contributes domain-driven systems integration, outcome measurement tech, and production-scale operations.
• An AI Center of Excellence will serve as the integration engine for deployments.
• Geographic scope targets the US, UK, Australia, and the Middle East.
• The collaboration aims to enable rapid deployment with accountability across client deployments.

AGM Details

• AGM held 6 August 2026 via VC/OAVM.
• Time: 10:00 A.M. IST.
• Remote e-voting: 1–5 August; AGM voting for 15 minutes after.
• Record date for entitlements: 30 July 2026.
• Scrutinizer: TRR & Associates; report dated 7 August 2026.

Resolutions and outcomes

• Resolution 1 (Ordinary): Adopt standalone and consolidated financial statements.
• Outcome: Passed with 99.99% in favour.
• Resolution 2 (Ordinary): Confirm interim dividend of Rs 5.50 per share.
• Resolution 3 (Ordinary): Re-appoint director retiring by rotation.
• Outcome: Passed with 99.92% in favour.
• Resolution 4 (Special): Continuation of Mr Khaitan as Non-Executive, Non-Independent.

Director changes

• Director changes: Pradip Kumar Khaitan re-appointed.
• Khaitan to continue as Non-Executive, Non-Independent director.

Business Overview

• Global BPM and intelligence partner across healthcare, BFS, CMT, retail, tech, and utilities.
• Kairos OS underpins integrated advisory, build, and operate services.
• Operations spanning US, UK, India, Philippines, Mexico, Romania, Trinidad & Tobago, South Africa, Australia.
• Engagements are outcomes-based with skin-in-the-game on client results.

Operational Highlights

• Q1FY27: four large deal wins; sixth straight quarter with 4+ deals.
• Exit deal pipeline remains healthy.
• 11th straight quarter of QoQ revenue growth.

Financial Performance

• Q1FY27 revenue ₹27,249m; YoY +22.9%; CC growth 12.3%.
• PAT ₹2,222m; margin 8.2%.
• EBIT ₹3,367m; margin 12.4%.
• EBITDA ₹4,513m; margin 16.6%.
• FY26 revenue ₹95,564m; PAT ₹6,744m; EBITDA ₹15,562m.
• Equity ₹46,149m; cash ₹2,170m; total assets ₹94,677m.
• Operating cash flow ₹983m; capex ₹480m.
• Net cash from financing activities outflow ₹333m.

Capital Structure & Liquidity

• Long-term borrowings nil as of Jun 30, 2026.
• Current borrowings ₹20,163m.
• Liquidity including current investments ₹3,016m.

Strategic Outlook

• FY27 guidance: 10-13% CC revenue growth; 12.25-12.75% EBIT margin.
• Four large deals in Q1FY27; pipeline healthy.
• Kairos AI ecosystem to enable scale; Transform-Implement-Operate engagement model.
• Medium-term aspiration: accelerated growth through AI-enabled services.

Risks & Mitigation

• Risks: client concentration, ramp-ups, wage inflation, withdrawal of fiscal incentives.
• Mitigation: outcomes-based engagements and Kairos-driven, domain-expert execution.

Governance & Leadership

• Key leaders: CFO Dinesh Jain; Chief Digital & AI Officer Hasit Trivedi; COO Sohit Brahmawar.

Business Overview

• Global BPS provider serving healthcare, BFS, CMT, retail, and utilities.
• Part of RP-Sanjiv Goenka Group; Kairos OS enables end-to-end engagements.

Operational Highlights

• Secured a large UK benefits and pensions admin transformation deal.
• Won a US academic medical center deal for insurance follow-up and denials management.
• Expanded US public health system relationship for patient contact center and self-pay services.
• Secured a US health insurer CX services deal.
• Expanded Medicaid eligibility services with a leading US academic health system.
• Selected by a US on-demand manufacturing marketplace for account servicing and CX.
• UK fibre broadband provider CX delivered from South Africa.
• European transport operator engaged for customer service operations.

Financial Performance

• Revenue ₹27,249m; YoY growth 22.9%; CC growth 12.3%.
• EBITDA ₹4,513m; EBITDA margin 16.6%.
• EBIT ₹3,367m; EBIT margin 12.4%.
• PAT ₹2,222m; PAT margin 8.2%.
• Diluted EPS ₹2.36; Q4 FY26 ₹2.91 in prior quarter.
• Cash from operations ₹983m; capex ₹480m; net cash change −₹415m.
• Closing cash ₹2,170m; total cash incl. investments ₹3,016m.

Capital Structure & Liquidity

• Long-term borrowings nil as on Jun 30, 2026.
• Short-term borrowings ₹20,163m; lease liabilities ₹7,069m.
• Equity ₹46,149m; reserves ₹39,175m.
• Net borrowings in quarter: +₹823m cash inflow.
• Treasury shares purchased ₹9m.

Strategic Priorities & Outlook

• FY27 guidance: 10-13% constant currency revenue growth.
• EBIT margin guidance: 12.25-12.75%.
• AI-driven UnBPO framework to improve automation and outcomes.
• Growth focus on expanding US/Europe delivery footprint.

Risks & Mitigation

• Top 5 clients contribute ~27.4% of revenue; Top 10 ~39.2%.
• TTM attrition at 33.1%; mitigated by automation and talent strategies.
• US exposure and ramp-up dependencies; diversification and AI-enabled delivery mitigate.

Governance & Leadership

• Part of RP-Sanjiv Goenka Group; no governance changes announced.
• Key finance leadership: CFO Dinesh Jain.

Approval of audited Q1 FY27 results

• Board approved Audited Standalone and Consolidated results for quarter ended June 30, 2026; auditors' reports unmodified.

Consolidated financial highlights

• Consolidated revenue from operations: ₹27,517.51 million for Q1 FY27.
• Net profit after tax: ₹1,659.17 million.
• Total comprehensive income: ₹2,107.47 million.
• Basic EPS: ₹2.40; Diluted: ₹2.36.

Standalone financial highlights

• Standalone revenue from operations: ₹9,134.42 million for Q1 FY27.
• Standalone net profit after tax: ₹2,067.91 million.
• Standalone total income: ₹8,940.47 million.
• Standalone EPS: Basic ₹2.99; Diluted ₹2.94.

Exceptional items

• Exceptional items for Q1 FY27: net expense ₹716.86 million; components: contract termination, indemnity, fair value adjustment.

Auditor's opinion / compliance

• Statutory auditors' opinion: unmodified for both standalone and consolidated results.

FY27 outlook

• FY27 outlook: revenue growth 10-13% in constant currency; EBIT margin 12.25-12.75%.