The stock is on the reversal trend after a steep correction headed towards Rs 58 as against the current market price of Rs 48.55, said technical analysts.
Billionaire investor Rakesh Jhunjhunwala has increased his stake in business process outsourcing services provider Firstsource Solutions (FSL) during the March quarter from 2.89 per cent to 3.26 per cent as the stock was available cheaper in terms of valuations after a correction of 50 per cent between September 2018 and February 2019.
Most of the analysts tracking the stock remain bullish and believe that FSL deserves better valuations on expectations of high dividend yield and healthy cash generation.
“We are bullish on the stock considering reasonable valuations, healthy cash generation and 3.3 per cent dividend yield, even though the company’s execution remains patchy,” said Dipesh Mehta, analyst, SBICAP Securities.
FSL has corrected 20 per cent and 15 per cent in the last six months and one-year, respectively, due to revenue miss on the back of execution slippages. FSL has lowered FY19 revenue growth guidance to closer to mid-single digits from earlier 7-9 per cent. However, the management is confident of 3-4 per cent QoQ growth in March 2019 quarter based on deal signings and better estimated growth in FY20 considering growth momentum in BFSI, healthcare provider, and mortgage businesses negating headwinds.