EXLS
ExlService Holdings, Inc.
$28.16
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 45.8% below fair value
You pay
$28.16
Bear
$31.12
Fair
$51.93
Bull
$76.18
Bear
$31.12
+10.5%
10% stage 1 growth, 11% discount
Fair
$51.93
+84.4%
17% stage 1 growth, 11% discount
Bull
$76.18
+170.5%
22% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (17% base case)
Terminal Value % of EV
44%
Implied Market Multiple
18.4x
Market is pricing in (growth)
7.8%
vs 16.9% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $40.25 from 19 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $51.93 per share.
Warnings
Stock-based employee pay equals 32% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $40.25 (from 19 analysts). Our estimate is 39% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions