On March 24, Rakesh Jhunjhunwala’s stake in Firstsource Solutions was at 2.06% with 1.43 crore shares, valuing at Rs.29.52 crore
After nearly three months or precisely 59 sessions since it hit a 52-week low, on June 23, Firstsource Solutions’ share price touched Rs.42.75, increasing over two times. Assuming Jhunjhunwala’s stake did not change, on June 23, his investment’s value became Rs.61.13 crore, resulting in more than Rs.31 crore profit.
In these three months, Firstsource Solutions witnessed a 107.02% hike in its share price, which means a one lakh rupees worth share purchase on March 24 would have been of value Rs.2.07 lakhs on June 23. The solid fundamentals of a company, along with a value buy, is what the ace investors look at while investing in shares.
In the last year, Firstsource Solutions has seen a drop in its share price by 25.46%, wherein a 10.48% drop came since the beginning of 2020. However, it gained around 16.85% in the last one month. As on today, the firm’s market cap stands at Rs.2,547 crore, while the PE ratio is at 7.62, which is lesser than the industry PE ratio of 10.63. Oracle Financial Services, a peer company of Firstsource Solutions, reported a PE ratio of 17.19. PE ratio is the ratio between the market price of the share and the earnings per share. A PE ratio of 20 indicates that to earn Re.1, one has to invest Rs.20 in that share.
The price to book ratio (P/B ratio), which compares the company’s market value with its book value, should ideally be in the range of 1-3, with the above one indicating that the company is overvalued. Firstsource Solutions has a P/B ratio of 0.92, while Oracle Financial Services has a 3.82 P/B ratio.
Firstsource Solutions has a comfortable 0.42 debt to equity ratio, while Oracle Financial Services has a debt-to-equity ratio of -0.67. The debt to equity ratio higher than 1.5 indicates the company’s ability to meet the debt obligations are poor.