Mphasis Q3 Results: Revenue Rises 2%, Profitability Takes A Hit
The decline in operational profitability was attributed to the acquisition of Silverline in October.
Mphasis Ltd. grew in a seasonally weak quarter for India's $250-billion IT services industry, even as its operational profitability reduced.
Revenue of the Bengaluru-based outsourcer rose 1.9% over the previous three months to Rs 3,337.9 crore in the quarter ended December, according to an exchange filing on Thursday. That compares with the Rs 3,429.3-crore consensus estimate of analysts tracked by Bloomberg.
Mphasis Q3 FY24 Earnings Highlights (Consolidated, QoQ)
Revenue up 1.9% at Rs 3,337.9 crore (Estimate: Rs 3,429.3 crore).
EBIT down 1.9% at Rs 497.1 crore (Estimate: 512.1 crore).
EBIT margin contracts 57 basis points to 14.89% (Estimate: 14.80%).
Net profit down 4.7% at Rs 373.6 crore (Estimate: Rs 392.3 crore).
The decline in operational profitability was attributed to the acquisition of Silverline, a New York-based digital transformation consultancy and Salesforce partner, in October. The $132-million deal translated into a 1.1% margin hit for the IT solutions provider.
"We are witnessing signs of stability, despite seasonal softness in Q3 FY24," Nitin Rakesh, chief executive officer at Mphasis, said. "While we are still in the midst of macro headwinds, clients are also accelerating towards newer sources of value such as AI to stay ahead."
"We continue to focus on converting TCV (total contract value) to revenue," Rakesh said.
Mphasis clocked a TCV of $241 million in the October–December period. The days sales outstanding—time taken to close a deal—reduced by one to 69 days.
Segmentwise, the revenue of Mphasis' technology, media and telecom practice took the biggest hit in the fiscal third quarter—declining 8.5% sequentially to Rs 521.9 crore. That was offset by growth in the financial services (0.9%), insurance (7.6%) and logistics (4.0%) verticals. Regionwise, the Americas brought in 80% of the top line, while Europe, Middle East and Africa, and India accounted for the rest.
The top client brought in 15% of the revenue. The top five accounted for 46% of the top line, and the top 10 for 55%, according to the financial statement on the company’s website.
Shares of Mphasis closed 0.06% higher to Rs 2,600.20 apiece on the BSE, as compared with a 0.15% decline in the benchmark Sensex. The quarterly results were declared after market hours.
