MphasiS Ltd. share price target

Mphasis’s (MPHL) 2QFY26 net revenue rose 1.2% QoQ in Constant Currency (CC), largely in line with our estimate of 1.5% QoQ CC.

Q2FY26 Performance: Mphasis reported revenues of US$ 445 mn, up 1.8% QoQ/ 3.6% YoY (up 2% QoQ/6% YoY in CC terms). Direct Revenue (97.5% of the mix) 2.2% QoQ/ 7.9% YoY in CC terms. The EBIT margin at 15.3%, was flat QoQ/ down ~10 bps YoY. PAT came at 469 crore (up 6.2% QoQ/ 10.8% YoY). It won a broad based...

driven by its AI-driven growth initiatives and steady conversion of pipeline to revenue. Therefore, we reiterate our ACCUMULATE rating on the stock, with a revised target price of Rs. 3,113 based on 28x FY27E adjusted EPS....

The revenue growth performance (+1.0% QoQ CC) was tad below our estimates (+1.4% QoQ CC), attributed to L&T business (down 46% QoQ) due to client-specific investments, which largely got offset through continued momentum in other parts of the portfolio. More importantly, the Direct business stood on a strong footing, grew 1.6% QoQ CC, led by BFS (+8.1% QoQ) and Insurance (+21.0% QoQ). The record high deal TCV of USD760m (80%+ New Gen) aided by four large deal wins in Q1 of three 100m+ TCV and one...

Mphasis demonstrated strong financial performance, with 2.9% q/q, 5.4% y/y revenue growth in CC, driven by significant contribution from the BFS sector (50% of revenue) and a sharp rebound in the Technology, Media & Telecommunications segment (18% of revenue).

Mphasis (MPHL)’s 4QFY25 gross revenue was 2.9% QoQ in Constant Currency (CC), in line with our estimate of 3.0% QoQ CC. Direct business grew 3.8%/6.8% QoQ/YoY in CC, aided by BFS and TMT.

The revenue growth performance (+2.9% QoQ CC) exceeded our estimates (+2.5% QoQ CC). ~80% of its portfolio mix maintained a steady state, while the rest of its business mix (L&T and Others) reported a decline of 8% and 3% QoQ, respectively. The continued improvement in large deal wins (13 large deals in FY25) and meaningful conversion of those deals are supporting the growth within BFSI. Despite having booked record high deal TCV of USD390m (11% QoQ), the deal funnel still looks encouraging (26% QoQ and 86% YoY). Even...

3QFY25 has yet again proven the volatility in Mphasis's business compared to its Tier-2 peers like Persistent & Coforge

Mphasis (MPHL)’s 3QFY25 revenue was 0.1% QoQ in Constant Currency (CC), in-line with our estimate of 0.2% QoQ CC. Direct business grew 0.2%/5.1% QoQ/YoY in CC, aided by Insurance and TMT. TCV was up 70% QoQ to USD351m.

Mphasis (MPHL)’s 2QFY25 revenue was 2.5% QoQ in Constant Currency (CC), which was above our estimate (+2 % QoQ CC). Direct business grew 2.4%/6.2% QoQ/YoY in CC, aided by TMT and BFS.

Revenue and EBIT margin broadly in line. TCV a tad soft deals getting pushed back on greater scrutiny on spending by clients on AI projects.

MPHL’s Q1FY25 growth missed our estimates with a marginal revenue decline of 0.1% cc. BFS turnaround did not materialise in this quarter as well, with just 1.4% growth QoQ, lower than even Q4FY24 print of 2.5%.

Mphasis (MPHL)’s 1QFY25 revenue was flat QoQ in constant currency (CC), which was weaker than our estimate (+1.2% QoQ CC).

Regional banks and mortgages business will continue to draw down the overall BFSI segment

Mphasis’ revenue growth, at 2.1% QoQ CC, was largely in line our estimate of 1.9%. An uptick in BFS with the regional banking crisis showing signs of easing helped lift growth (Technology, Media and Telecom), with an uptick of 4.4%, also contributed to growth. However, TCV was at USD 177mn (down 26.6% QoQ).

Mphasis reported a big miss on revenue with flat QoQ CC growth (vs. ISEC: +1.8%) and 0.1% QoQ USD (vs. ISEC: +1.9%; consensus: +2.1%) led by challenges in conversion of TCV to revenue, discretionary spend cuts, and continued challenge in DR business as well as BFS ex-DR. Deal TCV was soft at USD 255mn, down 16% YoY, partly due to higher conversion of pipeline to TCV in Q1FY24.

We attended Mphasis analyst meet wherein the company outlined its future growth strategies: 1) focus on expanding non-BFS verticals, 2) continuing strategy of proactive large deal wins, and 3) increasing the number of clients with high revenue potential (USD 100mn+ annually).