Firstsource Solutions Q3 Revenue Jumps 16%, FY26 Outlook Raised

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AuthorIshaan Verma|Published at:
Firstsource Solutions Q3 Revenue Jumps 16%, FY26 Outlook Raised
Overview

Firstsource Solutions reported robust Q3 FY2026 results, with revenues climbing 16.2% YoY to ₹24,431 million. Despite a reported PAT dip due to one-off charges totaling ₹1,001.45 million, adjusted PAT reached ₹2,022 million. The company raised its FY26 revenue growth forecast to 14.5%-15.5% and maintained an EBIT margin outlook of 11.5%-12%. An interim dividend of ₹5.50 per share was declared.

📉 The Financial Deep Dive

  • The Numbers:
    • Q3 FY2026 Revenue: ₹24,431 million (+16.2% YoY).
    • 9M FY2026 Revenue: ₹69,729 million (+19.8% YoY).
    • Q3 FY2026 Reported PAT: ₹1,203 million (down from ₹1,603 million YoY).
    • Q3 FY2026 Reported Diluted EPS: ₹1.71 (down from ₹2.27 YoY).
    • Q3 FY2026 EBIT: ₹2,915 million (+24.9% YoY), at 11.9% of revenues.
    • 9M FY2026 EBIT: ₹8,078 million (+26.5% YoY), at 11.6% of revenues.
  • The Quality:
    • The reported PAT decline was driven by a one-time expense of ₹1,001.45 million in Q3 FY2026. This included costs from new Labour Codes impacting gratuity and compensated absences, plus an impairment provision for an associate. Q3 FY2025 had an exceptional income of ₹88.09 million.
    • Adjusting for these exceptional items, Adjusted PAT for Q3 FY2026 stood at ₹2,022 million (8.3% of revenue), a significant figure compared to the reported profit. Adjusted Diluted EPS was ₹2.87.
    • The EBIT margin shows a positive trend, improving year-on-year as noted by the 24.9% YoY increase in EBIT and improved EBIT margin for the quarter and nine months.
  • The Grill:
    • Management provided an enhanced outlook for FY26, now projecting revenue growth in the 14.5% to 15.5% range (constant currency), including 1.5% from acquisitions.
    • The FY26 EBIT margin guidance remains between 11.5% and 12%.
    • The company highlighted strong business development, securing five large deals in Q3 FY2026, marking the fourth consecutive quarter with multiple significant wins. Nine new logos were added.

🚩 Risks & Outlook

  • Specific Risks:
    • The one-time expenses are a short-term drag on reported profits but do not indicate structural issues.
    • Execution risk for the acquired Pastdue Credit Solutions and integration challenges are potential concerns.
  • The Forward View:
    • Investors will monitor the sustained revenue growth momentum, successful integration of the UK acquisition, and the company's ability to maintain healthy adjusted margins and EBIT growth.
    • The consistent deal wins suggest a strong demand environment for the company's services.
    • The Board's decision to declare an interim dividend of ₹5.50 per equity share reflects confidence in its financial health.
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