Mphasis Limited - Operational challenges continue, retain REDUCE - Emkay

Mphasis's April'12 qtr show continues to indicate pressure on growth with rev at US$ 265 mn (-1.8% QoQ). Direct business declined QoQ after strong show in recent qtrs.

- Margins improve by ~130 bps QoQ to 19.7%,aided by headcount reduction (4th successive qtr of cut in employee base) and cost rationalizations.

- Mgmt further reduces outlook for rev in HP( Non ES) to ~US$55-60 mn for FY13( albeit see downside risks to the same),with pressure on HP Ent Svcs expected to continue.

- Tweak FYOct'12E/Oct'13E EPS higher by 2.4/1% to36.5/37.9 aided by lower currency resets as we cut revenue estimates sharply. REDUCE stays, TP unchanged at Rs 340.

Source : Equity Bulls

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