FIRSTSOURCE SOLUTIONS MULTIBAGGER POTENTIAL STOCK D28M02Y2014

Firstsource Solutions is a leading BPO company. Its focus areas are healthcare, telecommunications, Media, Banking and financial services. The company has over 100 clients, across various geographies. These include 21 Fortune500 and 9 FTSE100 companies. For more info check, http://www.firstsource.com

PRESENT DAY NUMBERS
CMP on Day28 Feb2014: Rs 28.25            Market cap: 1822 crores              BV: 26            FV: 10
Consol revenue FY13: 2818 cr (FY12 2255 cr)                   Net profit: 146 cr (FY12 62 cr)                                                                                                                   EPS: 2.82 (FY12: 1.44)
Cons revenue 9MFY14: 2320 cr            NP 9MFY14: 143 cr                       EPS: 2.04 (9MFY14)
Debt: 756 cr (long term)                      Cash on books: 149 cr

BRIEF HISTORY
Originally established in 2001 as 'ICICI infotech' by ICICI bank. Change of name to 'ICICI Onesource' in 2002. Name changed again, to 'Firstsource solutions Ltd' in 2006. Listed on indian stock exchange in the year 2007.

MULTIBAGGER POTENTIAL

Company on a growth track:
1. Consistent growth in revenues during last 8 quarters, despite a subdued global environment.
                    Cons revenue Q3 FY2014: 799 cr [Q3 FY2013: 719 cr, Q3 FY2012: 581 cr]   
2. Consistent improvement in business performance over last 8 quarters, thereby improving profitability.
                    Net profit Q3 FY2014: 48 cr [Q3 FY2013: 41 cr, Q3 FY2012: 7 cr]
Inflection points:
1. Rajesh Subramaniam re-joins the company as deputy MD and CFO in July 2011, and is further elevated to MD and CEO in April 2012
2. Sanjeev Goenka acquires 49.5% in Firstsource, and becomes its new owner in October 2012; and as part of the deal structuring, the company pays off the FCCB bond holders.

INTERESTING INFO
1. In his earlier stint, Rajesh Subramaniam had been the CFO of Firstsource from November 2002 to June 2008.
2. Ace investor Rakesh Jhunjhunwala, buys 2.5 cr shares(around 5%) in Firstsource, in July 2013.

MY TAKE
Though Firstsource is technically a midcap stock (<1850 cr market cap); the reality is a little different. It is a large company that employs around 30,000 people, operates 47 delivery locations across 5 countries(India, US, UK, Philippines and Sri Lanka), manages approx 90% repeat business from existing clients , with annual revenues of over 3000 cr. Ideal combination of an astute promoter and an experienced and competent management team. This belongs to the Buffett philosophy category of "Great business at a reasonable price".
 
A robust potential multibagger!!

Disclosure: Firstsource solutions is part of my core holdings (and I intend to add more)