Firstsource Solutions Limited Intrinsic Value
FSL · Services · Current price ₹286.7
Is Firstsource Solutions Limited undervalued?
We estimate the fair value of Firstsource Solutions Limited at ₹154 per share, against a market price of ₹248. That puts the share price about -37.8% above our estimate, at low confidence. This is our view of what the business is worth, not a target price or a forecast of where the share price will go.
How this fair value is calculated
This estimate comes from 3 methods: Discounted cash flow (2-stage) (₹80), Fair multiple (P/E) (₹219), Residual income (excess return on book) (₹97). These methods disagree materially, so the estimate is their midpoint rather than a weighted blend, and the disagreement is part of the finding. The full working, including the assumptions and what data was missing, is set out below.
The range around this estimate
Our estimate for Firstsource Solutions Limited spans ₹80 to ₹169. That range is wide, which is the honest signal here: read the range rather than the single number. A margin of safety means buying meaningfully below the estimate: the wider the range, the more room the assumptions leave for error.
Margin of safety
Value investors look for a margin of safety: a discount to estimated value that absorbs being wrong. At ₹248 against an estimated value of ₹154, Firstsource Solutions Limited trades at -37.8%, i.e. a premium to our estimate. How much margin to demand depends on how much you trust the inputs, which is what the confidence band below is for.
How we got this fair value
Every number below is part of the same estimate for Firstsource Solutions Limited. Nothing here is a target price or a forecast of where the share price will go.
The inputs are thin or the models disagree sharply. This is our least reliable kind of estimate, so read the range rather than the single number.
Estimate range ₹80 – ₹169
Why this method for this business
The DCF model is appropriate for a BPO/KPO business with predictable cash flows and a clear growth trajectory. The relative PE model captures market sentiment and peer comparisons, while residual income reflects the company's ability to generate returns above the cost of equity.
The models behind the number
These methods disagree materially, so the estimate is their plain midpoint rather than a weighted blend. The disagreement is itself the finding.
Intrinsic value from 2-stage discounted cash flows (primary for asset-light / normal businesses); FCFE path
downweighted: 126% from committee consensus (₹97)
Book value plus the present value of returns earned above the 10.6% cost of equity
- Discounted cash flow (2-stage) is the primary model, and other models are already included in the allowed_models list. No other models are relevant for this business type.
What was missing
- Lack of forward-looking analyst estimates for key metrics
- Limited information on the company's long-term growth strategy
What drives it
32 inputs, grouped by how strong each claim is
- FCF_0 (normalized)
- 370 ₹cr
- Net debt
- 2,663.4 ₹cr
- Sector-median P/E
- 12.22×
- Peers used
- 4
- EPS (TTM)
- 9.49 ₹/share
- Own-history median P/E
- 21.42×
- ROE (normalized)
- 15.9%
- Book value / share
- 62 ₹
fcf_norm (median ≤5y positive)
total_debt − cash
peer-median
peer-median
computed
reconstructed (one feature, dampened — not a cap)
computed
reported
- Discount rate (r)
- 14.4%
- Beta
- 1
- Cost of equity
- 10.6%
COE (building-block)
bottom-up industry
building-block
- Stage-1 start growth
- 13.24%
- Fade shape
- linear
- Terminal growth (g)
- 5%
- Stage-1 years
- 10 y
pat_cagr_5y
lifecycle Growth
macro terminal × quality premium
lifecycle Growth horizon
- Lifecycle stage
- Growth
- Quality premium
- 1×
- Term: quality
- +4.7%
- Term: growth
- +21.4%
- Term: capital_allocation
- +11.6%
- Term: financial_strength
- +7.3%
- Term: history
- +22.6%
- Term: sector_rerating
- +0.0%
- Term: rate_regime
- +1.2%
- Term: risk
- +0.0%
- Moat
- Narrow
- Excess-return horizon
- 10 yrs
forecast engine (L20)
moat None + capital allocation
quality 64/100 (high, stable returns) → premium
durable ~13% CAGR (ROCE 15% > hurdle) → premium
capital allocation: rising ROCE funded by strong FCF → premium
financial strength: low leverage (D/E 0.4) → mild premium
history: market paid +75% vs sector, dampened ×0.3 (one feature, not the anchor)
sector re-rating: no sector-norm history → not used
rates: risk-free 6.9% below ~7.1% normal → higher multiple
risk: no analyst-dispersion signal available → neutral (lowers confidence, not PE)
computed
computed
- Path
- FCFE
- Terminal-value fraction
- 0.454
- Premium vs sector
- +88.8%
- Fair-multiple confidence
- 80%
- Fair P/E
- 23.07×
computed (D/E vs 0.8)
PV_TV / (PV_1+PV_TV)
fundamentals + macro (not capped at own history)
data completeness + term agreement
sector median × ∏(1+term) — Dynamic Fair Multiple
Who computed this
A language model (qwen3:8b) selects the valuation method and the judgement inputs for Firstsource Solutions Limited: which models suit the business, the moat, the growth and margin assumptions. It does not produce the number. The fair value itself is computed in Python by a deterministic engine (version 2026.08.1) from those inputs, so the same inputs always give the same result and every figure above can be traced to a source.
Estimated 14 Sept 2026. Re-run as new financials and news arrive.
How we value stocks
We estimate what a business is worth from its own economics: cash flows, returns on capital, and a multiple justified by its quality, rather than from where the share price has been. A fair value estimate is a view, not a verdict, and it is only as good as the inputs listed above.
Read the full fair-value methodologyMore on Firstsource Solutions Limited
DocStoX estimates are computed from reported financials, for informational purposes only, not investment advice. Consult a SEBI-registered advisor before investing.