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We attended RPSG Group’s ‘Investor Day’ to discern Firstsource Solutions (FSOL)’s growth strategy, demand setting, and business outlook. KTAs: 1) Mgmt outlined its growth strategy that encompasses the ‘One Firstsource’ framework, which focuses on 7 strategic initiatives, including simplification of organizational structure and cross-selling/up-selling, particularly in the 50 potential growth accounts it has identified. The framework also grades (capability-wise) FSOL’s services portfolio into 5 areas—collections, customer experience, consulting, trust & safety, data & analytics. Mgmt believes that steadfast execution of the framework will drive a possible mid-teen revenue growth, with 14% EBITM aspiration for the next 3 years. 2) Mgmt remains confident about achieving revenue growth of 11.5-13.5% in FY25 and EBITM of 11-12%. It targets reaching a USD1bn revenue run-rate by Q4FY26, and expanding margin by 50-75bps annually, from FY25 on. We roll forward our TP to Sep-25E and retain ADD, with TP raised to Rs330/sh at 25x its Sep-26E EPS

Seven strategic initiatives to drive top-quartile growth with margin uptick CEO Idnani shared his growth strategy encompassing the ‘One Firstsource’ framework, with focus on seven strategic initiatives: i) simplify organizational structure – establish clear accountability and ensure faster decision-making. Per the revised organization structure, North America is aligned along 3 verticals (BFS, Healthcare, CMT), while Europe will remain a geographical business unit. ‘One Firstsource’ also aligns the services portfolio into five capability areas—collections, customer experience, and emerging & fast-growing services like consulting, trust & safety, and data & analytics; ii) increase cross-selling and upselling initiatives to gain wallet share – has identified 50 accounts which have significant growth opportunities; the company will make necessary investments to scale these; iii) improve profitability – the company has identified 24 margin initiatives, which include offshore shift, employee pyramid, span of control, optimizing delivery infrastructure, etc, and which would drive a 300bps margin improvement over the next 3 years; iv) elevate employee experience; v) expand capabilities into adjacent areas; vi) amplify the Firstsource brand by strengthening relationships with analysts/advisors and across the partnership ecosystem; and vii) bring in technology across all company operations. It is also strengthening its offerings using partnerships with startups, which have IP but lack distribution; FSOL has a client base and distribution network, but lacks IP.

Cross sell/upsell to gain wallet share for driving predictable, profitable growth FSOL has >200 clients, incl 19 F500 and 3 FTSE-100 companies. The company identified 50 accounts which entail significant growth opportunities, and plans to assign a client partner with a dedicated team with clear ownership to identify white spaces, develop a structured account plan, take proactive proposals to clients, and work with them to develop a pipeline of large transformational opportunities for driving its cross-selling/upselling. It is investing in scaling its consulting practice to act as a ‘tip of the spear’ for the increasing size of the sales funnel. FSOL has expanded its footprint, into mortgage, with expansion in servicing, home equity, regional banks, etc, to lessen the volatility.

GenAI more of an opportunity than threat FSOL expects wider adoption of GenAI. It is still early days of GenAI adoption for most enterprises. After the initial excitement, players are now viewing GenAI more holistically. Mgmt highlighted that it is implementing GenAI in all its systems which is helping the company achieve higher propensity to win deals. It expects AI to aid both, revenue and margin accretion. Mgmt highlighted that demos of its proprietary framework FirstSense AI have influenced >5 customer wins. With relAI, which supports multi-language proprietary LLMs, FSOL has completed >55 POCs, with over 8 co-pilots under production. expects wider adoption of GenAI. It is still early days of GenAI adoption for most enterprises. After the initial excitement, players are now viewing GenAI more holistically. Mgmt highlighted that it is implementing GenAI in all its systems which is helping the company achieve higher propensity to win deals. It expects AI to aid both, revenue and margin accretion. Mgmt highlighted that demos of its proprietary framework FirstSense AI have influenced >5 customer wins. With relAI, which supports multi-language proprietary LLMs, FSOL has completed >55 POCs, with over 8 co-pilots under production.

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