Firstsource margin expands as result-day stock gain far exceeds history
Revenue growth outpaced expenses, but interest costs rose 22.06% year on year and the operating margin remained below the Services peer median.
Filed 06 May 2026, 13:25 IST · Firstsource Solutions Ltd (FSL)
Key takeaways
- Consolidated revenue grew 19.52% year on year to Rs 2,583.45 cr, while operating profit rose faster at 29.33%.
- Operating margin expanded 1.26 percentage points year on year to 16.66% as expenses grew slower than revenue.
- The stock rose 11.33% on the result day, far above its 1.66% median move after the previous eight results.
Price around the results
Revenue growth lifted operating profit
Consolidated revenue increased 19.52% year on year and 5.75% sequentially, with operating profit growing faster at 29.33% year on year and 6.90% sequentially. Expenses rose 17.74% year on year and 5.52% sequentially, so operating leverage supported the margin expansion. Management said the company won a large US deal to redesign and transform customer experience for a financial technology leader, and added business from a UK-based MVNO for account servicing, billing and customer support across multiple markets.
Margin improved despite higher finance costs
Operating margin widened 1.26 percentage points year on year and 0.18 percentage points sequentially because costs grew slower than revenue. Interest expense increased 22.06% year on year and 20.28% sequentially, while depreciation rose 28.13% year on year. The tax rate increased 0.90 percentage points year on year, so the 27.73% net-profit growth was not helped by a lower tax rate; other income was negative and represented -0.66% of pre-tax profit.
Margin reached a four-quarter high but trails peers
Operating margin has risen in every quarter shown, from 15.11% in Q3FY25 to 16.66% in Q4FY26, making this the fourth consecutive quarterly increase. The sequential improvement was modest because Q3FY26 already had a 16.48% margin. Firstsource's 16.66% margin was 14.49 percentage points below the 31.15% median for 12 Services companies that had reported.
Result-day reaction was unusual for the stock
The stock gained 11.33% on the result day, with volume at 4.3 times the reference level and a 10.09% gain relative to the benchmark. That reaction was unusually large against the previous eight results, after which the stock rose twice and fell six times, with a median absolute move of 1.66%.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,583 cr | ₹2,443 cr | +5.75% | +19.52% |
| Other income | ₹-2 cr | ₹-97 cr | +98.23% | — |
| Expenses | ₹2,153 cr | ₹2,040 cr | +5.52% | +17.74% |
| Operating profit | ₹430 cr | ₹403 cr | +6.90% | +29.33% |
| Operating margin (%) | 16.66% | 16.48% | — | — |
| Interest | ₹52 cr | ₹43 cr | +20.28% | +22.06% |
| Depreciation | ₹116 cr | ₹111 cr | +4.40% | +28.13% |
| Profit before tax | ₹261 cr | ₹152 cr | +71.81% | +29.20% |
| Tax | ₹55 cr | ₹31 cr | +76.59% | +34.93% |
| Net profit | ₹205 cr | ₹120 cr | +70.57% | +27.73% |
| EPS (₹) | ₹2.97 | ₹1.74 | +70.69% | +27.47% |
Operating margin of 16.66% compares with a Services sector median of 31.15% across 12 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +11.33% | +10.09% |
| Next session | +7.57% | — |
| 5 sessions | +11.06% | +13.64% |
| 15 sessions | +21.20% | — |
| 30 sessions | +9.77% | — |
Volume on the results session was 4.30× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
New orders
- The company won a large US deal from a global financial technology leader to redesign and transform customer experience.
- The company secured additional business from a leading UK-based MVNO to manage account servicing, billing and customer support across multiple markets.
What to watch
- Whether operating margin holds above 16.66% after four consecutive quarterly increases.
- Whether sequential revenue growth remains above 5.75%.
- Whether interest-cost growth moderates from 20.28% sequentially.