Firstsource Solutions Debt dropped on 12.4% and Net Debt / EBITDA dropped on 0.4x from 2.5x to 2.1x
12-05-2016 • About Firstsource Solutions (
$FSL) • By InTwits
Firstsource Solutions reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Firstsource Solutions has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's a lot of higher than industry average of 35.9%.
- CAPEX is quite volatile: ₹858m in FY2016, ₹463m in FY2015, ₹358m in FY2014, ₹396m in FY2013, ₹526m in FY2012
- The company has business model with average profitability: ROIC is 10.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.1x while industry average is -0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Firstsource Solutions's Revenue increased on 6.4%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 6.0 pp from 15.0% to 20.9% in FY2016. EBITDA Margin followed a growing trend at 1.0 pp per annum in the last 5 years.
Net Income margin showed almost no change in FY2016. Net Income margin followed a growing trend at 1.3 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.7% in FY2016. Firstsource Solutions's CAPEX/Revenue increased slightly on 1.3 pp from 1.4% in FY2013 to 2.7% in FY2016. For the last three years the average CAPEX/Revenue was 1.8%. During FY2012-FY2016 CAPEX as a % of Revenue bottomed in FY2014 at 1.2% and was growing since that time.
Return on investment
The company operates at low ROIC (10.3%) and ROE (11.7%). ROIC increased slightly on 0.86 pp from 9.5% to 10.3% in FY2016. ROE increased slightly on 0.53 pp from 11.2% to 11.7% in FY2016. ROIC followed a growing trend at 1.5 pp per annum in FY2012-FY2016. ROE grew at 1.7 pp per annum in FY2012-FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.1x and Debt / EBITDA is 2.2x. Net Debt / EBITDA dropped on 0.4x from 2.5x to 2.1x in FY2016. Debt dropped on 12.4% while cash dropped on 13.8%. Net Debt/EBITDA stuck to a declining trend at -0.6x per annum in FY2012-FY2016.
Firstsource Solutions has short term refinancing risk: cash is only 14.3% of short term debt.
Management team
The company's CEO is Rajesh Subramaniam. Rajesh Subramaniam has 8 years tenure with the company.
Financial and operational results
Firstsource Solutions ($FSL) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 22,550 | 28,185 | 31,059 | 30,347 | 32,303 | 6.4% |
| EBITDA | 1,958 | 2,796 | 3,621 | 3,808 | 4,048 | 6.3% |
| Net Income | 620 | 1,466 | 1,930 | 2,343 | 2,650 | 13.1% |
Balance Sheet
|
|---|
| Cash | 1,464 | 885 | 1,846 | 800 | 689 | -13.8% |
| Short Term Debt | 367 | 4,263 | 5,327 | 6,222 | 4,811 | -22.7% |
| Long Term Debt | 9,259 | 8,501 | 6,642 | 4,143 | 4,270 | 3.1% |
Cash flow
|
|---|
| Capex | 526 | 396 | 358 | 463 | 858 | 85.5% |
Ratios
|
|---|
| Revenue growth | 12.1% | 25.0% | 10.2% | -2.3% | 6.4% | |
| EBITDA growth | -32.6% | 42.8% | 29.5% | 5.1% | 6.3% | |
|
|---|
| EBITDA Margin | 8.7% | 9.9% | 11.7% | 12.5% | 12.5% | -0.0% |
| Net Income Margin | 2.8% | 5.2% | 6.2% | 7.7% | 8.2% | 0.5% |
| CAPEX, % of revenue | 2.3% | 1.4% | 1.2% | 1.5% | 2.7% | 1.1% |
|
|---|
| ROIC | 4.0% | 7.0% | 9.0% | 9.5% | 10.3% | 0.9% |
| ROE | 4.3% | 9.3% | 10.1% | 11.2% | 11.7% | 0.5% |
| Net Debt/EBITDA | 4.2x | 4.2x | 2.8x | 2.5x | 2.1x | -0.4x |
Peers in BPO/KPO
Below you can find Firstsource Solutions benchmarking vs. other companies in BPO/KPO industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vakrangee ($VAKRANGEE) | - | 14.3% | 26.2% | 42.4% | 14.8% |
| Hinduja Global Solutions ($HGS) | 44.8% | 27.6% | 26.3% | 12.1% | - |
| Eclerx Services ($ECLERX) | 38.2% | 39.7% | 27.3% | 12.0% | - |
| Xchanging Solutions ($XCHANGING) | -62.2% | 16.4% | 18.0% | -2.6% | - |
| Allsec Technologies ($ALLSEC) | 15.5% | 74.8% | -37.6% | -24.4% | - |
| |
|---|
| Median (5 companies) | 26.9% | 27.6% | 26.2% | 12.0% | 14.8% |
|---|
| Firstsource Solutions ($FSL) | - | 25.0% | 10.2% | -2.3% | 6.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eclerx Services ($ECLERX) | 40.4% | 38.7% | 42.0% | 33.5% | - |
| Vakrangee ($VAKRANGEE) | 17.8% | 24.7% | 27.4% | 26.0% | 25.8% |
| Hinduja Global Solutions ($HGS) | 11.9% | 11.3% | 13.0% | 11.3% | - |
| Xchanging Solutions ($XCHANGING) | 13.1% | 10.1% | 4.1% | 10.0% | - |
| Tricom India ($TRICOM) | - | - | - | 5.8% | - |
| |
|---|
| Median (6 companies) | 13.1% | 11.4% | 13.0% | 10.6% | 25.8% |
|---|
| Firstsource Solutions ($FSL) | 8.7% | 9.9% | 11.7% | 12.5% | 12.5% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eclerx Services ($ECLERX) | 5.3% | 4.0% | 2.5% | 6.5% | - |
| Hinduja Global Solutions ($HGS) | 31.5% | 7.2% | 6.1% | 5.8% | - |
| Vakrangee ($VAKRANGEE) | 27.7% | 6.0% | 11.7% | 0.2% | 0.4% |
| |
|---|
| Median (3 companies) | 6.6% | 5.8% | 5.9% | 5.8% | 0.4% |
|---|
| Firstsource Solutions ($FSL) | 2.3% | 1.4% | 1.2% | 1.5% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eclerx Services ($ECLERX) | 61.1% | 58.7% | 62.4% | 41.0% | - |
| Vakrangee ($VAKRANGEE) | 20.2% | 21.3% | 28.3% | 36.4% | 36.8% |
| Hinduja Global Solutions ($HGS) | 8.1% | 8.2% | 12.4% | 11.0% | - |
| Xchanging Solutions ($XCHANGING) | 8.3% | 6.6% | 2.2% | 7.2% | - |
| Allsec Technologies ($ALLSEC) | -13.0% | 19.9% | -40.1% | -26.5% | - |
| |
|---|
| Median (7 companies) | 8.3% | 8.2% | 12.4% | 11.0% | 36.8% |
|---|
| Firstsource Solutions ($FSL) | 4.0% | 7.0% | 9.0% | 9.5% | 10.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hinduja Global Solutions ($HGS) | 0.8x | 1.7x | 1.5x | 1.4x | - |
| Vakrangee ($VAKRANGEE) | 1.9x | 1.4x | 0.9x | 0.6x | 0.2x |
| Tricom India ($TRICOM) | 2.1x | 4.6x | - | 0.0x | - |
| Eclerx Services ($ECLERX) | -0.7x | -0.5x | -0.7x | -0.6x | - |
| Xchanging Solutions ($XCHANGING) | -0.8x | -2.8x | -6.2x | -3.9x | - |
| |
|---|
| Median (5 companies) | 0.3x | 1.3x | 0.1x | 0.0x | 0.2x |
|---|
| Firstsource Solutions ($FSL) | 4.2x | 4.2x | 2.8x | 2.5x | 2.1x |
