Firstsource profit jumps 40.42% QoQ as margin recovers
Revenue grew +22.20% YoY, with costs growing more slowly; the margin remains below the 21.73% median for 17 reported Services peers.
Filed 29 Oct 2026, 16:23 IST · after market close · Firstsource Solutions Ltd (FSL)
Key takeaways
- Consolidated net profit rose +29.49% YoY as revenue growth of +22.20% outpaced expense growth of +21.63%.
- Operating margin improved 0.09 percentage points QoQ to 16.65%, extending the recovery after the Q1FY27 dip.
- Other income contributed only -0.60% of pre-tax profit, while the QoQ tax-rate decline of 2.01 percentage points helped net profit rise +40.42%.
Price around the results
Revenue growth continued to outpace costs
Firstsource reported consolidated revenue growth of +22.20% YoY and +3.70% QoQ, while expenses rose +21.63% YoY and +3.58% QoQ. That spread lifted operating profit +25.14% YoY and +4.26% QoQ. The resulting net-profit growth was faster than operating-profit growth QoQ because the tax rate fell 2.01 percentage points to 22.35%.
Margin recovery remains gradual, with limited other-income support
Operating margin expanded 0.39 percentage points YoY and 0.09 percentage points QoQ, as expenses grew slightly slower than revenue in both comparisons. Interest expense rose +19.25% YoY, partly offsetting the operating improvement. Other income was negative and represented only -0.60% of pre-tax profit, so the quarter's profit growth was not driven by a large other-income contribution.
Margin is recovering but remains below the Services peer median
The operating margin has moved from 15.65% in Q1FY26 to 16.65% in Q2FY27, despite a dip from 16.66% in Q4FY26 to 16.56% in Q1FY27. Firstsource's 16.65% margin was 5.08 percentage points below the 21.73% median of 17 Services peers that had reported. The current quarter therefore marks a recovery in direction, but not a change in its relative position: it ranked eighth from the bottom.
New UK wins add to the business pipeline; market reaction is pending
Management said Firstsource expanded its relationship with a leading UK-based MVNO for customer-experience services across multiple markets, including moving in-house operations to its offshore delivery centre. The company also said it was selected by a leading UK and European bank as a new logo for managed-operations support services. The results were filed after market close, while the stock has fallen six times and risen twice after its past eight results, with a median absolute move of 2.29%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,826 cr | ₹2,725 cr | +3.70% | +22.20% |
| Other income | ₹-2 cr | ₹-66 cr | +97.27% | — |
| Expenses | ₹2,355 cr | ₹2,274 cr | +3.58% | +21.63% |
| Operating profit | ₹471 cr | ₹451 cr | +4.26% | +25.14% |
| Operating margin (%) | 16.65% | 16.56% | — | — |
| Interest | ₹51 cr | ₹52 cr | -1.47% | +19.25% |
| Depreciation | ₹118 cr | ₹115 cr | +3.29% | +8.08% |
| Profit before tax | ₹299 cr | ₹219 cr | +36.48% | +33.44% |
| Tax | ₹67 cr | ₹53 cr | +25.25% | +49.29% |
| Net profit | ₹232 cr | ₹166 cr | +40.09% | +29.49% |
| EPS (₹) | ₹3.37 | ₹2.40 | +40.42% | +29.62% |
Operating margin of 16.65% compares with a Services sector median of 21.73% across 17 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
New orders
- Firstsource expanded its relationship with a leading UK-based MVNO for customer experience services across multiple markets.
- Firstsource was selected by a leading UK and European bank for managed operations support services as a new logo.
What to watch
- Whether operating margin holds above 16.65% after the 0.09-percentage-point QoQ recovery.
- Whether revenue growth stays ahead of expense growth after +3.70% and +3.58% QoQ, respectively.
- Whether the tax rate remains near or below 22.35% rather than returning to Q1FY27's 24.36%.