Firstsource Solutions Receives 'Buy' Rating from MarketsMOJO: A Strong Investment Opportunity in BPO/ITeS Industry

Firstsource Solutions, a leading BPO/ITeS company, has recently received a 'Buy' rating from MarketsMOJO on October 9, 2024. This upgrade is based on several positive factors that make the stock a good investment opportunity.
One of the main reasons for the 'Buy' rating is the company's strong ability to service its debt. With a low Debt to EBITDA ratio of 1.37 times, Firstsource Solutions is in a good position to manage its debt and maintain financial stability.

In addition, the stock is currently in a bullish range and has shown a positive technical trend since October 8, 2024. This has resulted in a return of -1.07% since then. Furthermore, various technical indicators such as MACD, Bollinger Band, KST, and OBV are all showing bullish signals for the stock.

Firstsource Solutions also has an attractive valuation with a ROCE of 13.9 and an Enterprise value to Capital Employed ratio of 4.7. This indicates that the stock is currently trading at a discount compared to its historical valuations.

Despite a decline in profits by -5.5% over the past year, the stock has still managed to generate a return of 95.20%. This is significantly higher than the market (BSE 500) returns of 37.10%, showcasing the company's market-beating performance.

Another positive aspect of Firstsource Solutions is its high institutional holdings at 28.87%. This means that these investors have better resources and capabilities to analyze the company's fundamentals, making it a more reliable investment option for retail investors.

However, there are some risks associated with investing in Firstsource Solutions. One of them is the potential for poor long-term growth, as the company's operating profit has only grown at an annual rate of 8.61% over the last 5 years.

Additionally, the company's results for June 2024 were flat, with the lowest operating cash flow and the highest interest expenses. This could potentially impact the company's financial performance in the future.

Despite these risks, Firstsource Solutions remains a strong and attractive investment option in the BPO/ITeS industry. With a market cap of Rs 22,325 crore and annual sales of Rs 6,598.14 crore, it is the largest company in the sector and accounts for 45.92% of the entire industry. Investors can consider adding this stock to their portfolio for potential long-term gains.