Firstsource Solutions: Reported Profit Dips 25% On One-offs; Adjusted PAT Soars, FY26 Outlook Raised

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AuthorKavya Nair|Published at:
Firstsource Solutions: Reported Profit Dips 25% On One-offs; Adjusted PAT Soars, FY26 Outlook Raised
Overview

Firstsource Solutions reported a 25% year-on-year dip in Q3 FY2026 net profit to ₹1,203 million due to ₹1,001 million in exceptional expenses, including new Labour Code impacts. However, adjusted profit grew robustly, up 83% to ₹2,022 million on 16.2% revenue growth. The company acquired UK's Pastdue Credit Solutions and raised its FY26 revenue growth and EBIT margin guidance, while declaring an interim dividend of ₹5.50.

📉 The Financial Deep Dive

Firstsource Solutions posted mixed results for Q3 FY2026, with reported net profit declining 25% YoY to ₹1,203.29 million (EPS: ₹1.71), primarily due to significant exceptional items. A one-time expense of ₹913.53 million related to new Labour Codes and ₹87.92 million for investment impairment created headwinds.

However, underlying operational performance remained strong. Revenue from operations surged 17.2% YoY to ₹24,466.97 million. On an adjusted basis, excluding exceptional items, EBIT margin stood at a healthy 11.9%, with EBIT growing 24.9% YoY to ₹2,915 million. Adjusted PAT climbed an impressive 83% to ₹2,022 million, translating to an adjusted diluted EPS of ₹2.87. Free Cash Flow (FCF) to adjusted PAT was robust at 164% for the quarter.

For the nine months ended December 31, 2025, revenue grew 20.7% YoY to ₹70,030.76 million. Reported PAT rose 8.2% YoY to ₹4,691.67 million (EPS: ₹6.65), while adjusted PAT stood at ₹5,510 million (EPS: ₹7.81).

The Board approved an interim dividend of ₹5.50 per equity share. The acquisition of Pastdue Credit Solutions (PDC) in the UK was completed on December 11, 2025, for GBP 22 million.

🚩 Risks & Outlook

Management has raised the outlook for FY26, guiding for constant currency revenue growth between 14.5% to 15.5%, including 1.5% from acquisitions. The projected FY26 EBIT margin is now banded at 11.5% to 12%. Key business highlights included five large deal signings and nine new logos. Investors should monitor the successful integration of PDC and the impact of evolving Labour Codes on employee costs, alongside margin performance in the stated guidance band.

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