Are Firstsource Solutions Ltd latest results good or bad?

Firstsource Solutions Ltd's latest financial results present a complex picture of operational performance. In the quarter ending December 2025, the company achieved record revenues of ₹2,443.08 crores, reflecting a sequential growth of 5.66% and a year-on-year increase of 16.21%. This marks the seventh consecutive quarter of positive revenue growth, indicating the company's strong position in the business process management sector. However, the net profit for the same quarter fell sharply to ₹120.33 crores, representing a significant sequential decline of 32.97% and a year-on-year decrease of 24.94%. This decline in profitability is concerning, especially given the robust revenue growth, and raises questions about the company's cost management and potential one-time expenses that may have impacted the bottom line. The operating margin, excluding other income, improved slightly to 16.32%, the highest in recent quarters, suggesting that core business operations remain stable. However, the profit after tax (PAT) margin contracted to 4.88%, marking the lowest level in seven quarters, which further highlights the disconnect between revenue growth and profitability. Additionally, employee costs, which constitute a significant portion of expenses, rose in line with revenue growth, maintaining a stable percentage of sales. The company's return on equity stood at 15.29%, while the return on capital employed was noted as weak at 14.31%, indicating challenges in generating strong returns from operating assets. In terms of market sentiment, the stock has seen some movement, gaining 1.49% post-results, although it remains significantly below its 52-week high. The company has experienced an adjustment in its evaluation, reflecting the market's reassessment of its growth prospects and profitability sustainability following these results. Overall, Firstsource Solutions Ltd's latest results underscore a strong revenue trajectory but raise critical concerns about profitability and cost management that warrant further scrutiny.