Mphasis - Q2FY13 Result Review - Angel Broking

Mphasis announced its 2QFY2013 numbers which outperformed our expectations on the revenue front but marginally disappointed on operating margin and bottomline front. The dollar revenues came in at US$267mn, up 12.1% qoq, aided by revenues from Digital Risk acquisition. Revenues from direct channel on organic basis declined by 4.9% qoq while on inorganic basis it increased by 25.1% qoq. Revenues from HP channel declined by 1.4% qoq. In INR terms revenues came in at Rs. 1,405cr, up 11.8% qoq. The Direct vs. HP business mix shifted from 48:52 in 1QFY2013 to 54:46 in 2QFY2013 further balancing client concentration risk.

The company again witnessed headcount reduction in Application as well as ITO business by 204 and 173 employees, respectively. EBITDA margin of the company declined by ~130bp qoq to 17.2%, due to increase in G&A expenses arising from Digital Risk. PAT came in at Rs. 176cr, down 4.3% qoq. The company added 21 new clients during the quarter, out of which 10 were added in direct channel. The company remained committed to increase revenues from direct channel. The stock is currently under review.

Source : Equity Bulls

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