MphasiS Ltd. share price target

Mphasis reported a miss in revenue, which fell 3.5% QoQ in cc terms, -3.4% QoQ / -8.4% YoY. The revenue decline was due to weakness in banking and capital markets (BCM, -8.8% QoQ, -14.8% YoY). BCM ex-mortgage was down 8.7% QoQ given delayed decision-making across large banks and weakness in regional banks.

Mphasis reported a miss in revenue, which fell -3.5% QoQ CC, -3.4% QoQ USD (I-Sec: -0.9%, cons: 0.01% USD) and -8.4% YoY CC. The revenue decline was due to weakness in banking and capital markets (BCM, -8.8% QoQ, -14.8% YoY). BCM ex-mortgage was down 8.7% QoQ given delayed decision-making across large banks and weakness in regional banks.

Q1 missed estimates as dollar revenue slipped 3.4% QoQ following a slowdown in both direct business and DXC

Weak Q4 revenue print (-4.1% QoQ); DR and DXC remained a drag on growth

Mphasis posted weak revenue print, yet maintained its margins. FY23 growth of 9.7% in cc terms was impacted by 4% from a decline in Digital Risk and 1.6% from a decline in DXC business. The increase in deal pipeline by 35% YoY including higher growth in non-BFSI deal pipeline is a sign of portfolio diversification and/or relative stress in BFSI (60% of revenue).

Mphasis has reported a revenue decline of -4.5% QoQ CC and -4.1% QoQ US$, much lower than our and consensus estimates (vs ISEC: -0.5% QoQ US$, BBG cons: -0.3% QoQ US$) in Q4FY23. Direct revenue growth declined 3.4% QoQ CC and DXC declined 24.8% QoQ CC.

We find Mphasis much better placed compared to peers with a handle on its operating parameters and a risk reward that is tilted favourably (since MPHL is available at relatively cheaper valuations compared to peers).cheaper valuations compared to peers).