Tuesday, January 19

Rakesh Jhunjhunwala booked profit in this stock after a 5x rally in 10 months

Ace Investor Rakesh Jhunjhunwala has cut his stake in IT firm Firstsource Solutions after the stock rallied over 5 times from its 52-week low of Rs 20.65 that hit on March 24, 2020.
The company filed its latest shareholding pattern post market hours on Friday. By 1.45 pm, the stock was trading 2.27 per cent lower at Rs 99.15 on BSE. Still the stock is up nearly 5 times over its 52-week low levels and trades at 28.44 times its trailing 12-month earnings per share, as per BSE.

The stock hit a high of Rs 115.45 on December 29 and was up nearly 6 times over March lows.

As per latest filing, Jhunjhunwala held 9,000,000 shares or 1.29 per cent stake in Firstsource Solutions at the end of December quarter, down 159 basis points from 20,000,000 shares or 2.88 per cent. Jhunjhunwala has been holding the stock since at least December quarter of 2015.

Anand Rathi in its earnings preview said December could be another quarter of revenue surprise for the IT firm. Mortgage business continues to do well, it said, while suggesting that margins would be benefitted from revenue growth and a strong British pound tailwind.

“We expect growth to be spread across contact-centre and back-office segments. Healthcare may start showing some progress,” it said.

Sales for the IT firm is expected to jump 17.4 per cent YoY (up 4 per cent QoQ) to Rs 1,226 crore. Net profit for the quarter is likely to jump 27.6 per cent YoY (8.5 QoQ) to Rs 114.30 crore. Ebit margin is seen expanding to 11 per cent, 65 basis points YoY and 38 basis points QoQ.

Antique Stock Broking has Firstsource as its top picks in the IT sector.

Credit: Stocks-Markets-Economic Times

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