Mphasis - Company Update - ICICI Securities

Mphasis reported 4.6% QoQ decrease in revenues in constant currency terms and margins declined by 60 bps to 15.7%. However, the company has seen robust deal wins in the quarter with 66% YoY growth in new deal TCV to US$259 million. In addition, the company has also signed US$216 million deal in July 2020 which will be reflected in Q2FY21E. Further, the company has also seen healthy client addition of 1 client in US$75 million and 3 in US$1 million bucket. In addition, the company has guided margins of 15.5%-16.5% for FY21E.

Valuation & Outlook

The company has lesser exposure to impacted verticals and continues to see improved traction in deal wins. In addition, the company is de risking its DXC portfolio by growing its Direct international channel and driving its new client acquisition & Blackstone portfolio. Mphasis is also consistently winning large deals in greater than US$20 million category which bodes well for the company's revenue growth trajectory. We also expect the company to witness improvement in margins in coming quarters led by cost rationalisation and improvement in revenues. Further, healthy balance sheet could help the company in inorganic revenue growth opportunities. However, recent run up in price prompt us to downgrade the stock from BUY to HOLD with a revised target price of Rs. 1235 (16x FY22E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Mphasis_CoUpdate_Jul20.pdf

Shares of MPHASIS LTD. was last trading in BSE at Rs.1118.7 as compared to the previous close of Rs. 979.75. The total number of shares traded during the day was 192555 in over 16370 trades.

The stock hit an intraday high of Rs. 1173.3 and intraday low of 1001.85. The net turnover during the day was Rs. 211191723.

Source : Equity Bulls

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