Mphasis Q2 Results Review - Inline; Banking, Financial Services To Maintain Growth Momentum: Dolat Capital

Dolat Capital Report

Mphasis Ltd. reported revenue of $421 million up 2.4% constant currency QoQ (our estimate: 2.3%), as Direct biz (96% of revenue) grew 2.4% QoQ. Operating profit margin stood at 15.4%, up 40 bps QoQ (our estimate: 15.4%) driven by operating efficiencies and forex (+20 bps).

Management expects sequential growth expectations in Q3/Q4 driven by BFS ramp-ups, while operating profit margin guidance is retained at 14.6%-16%.

We revise our FY25/FY26E EPS estimate by -1.9%/-4.6% given the need for increased investments to drive up deal wins.

We believe growth to sustain led by-

1. Volume uptick in mortgage,

2. Ramp-up in banking, financial services and

3. Increased focus on AI deals.

However, the valuation is full, thus we maintain ‘Reduce’ rating with target price of Rs 2,970 (at 26 times FY27E).

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