Company Update - Mphasis - ICICI Direct

Blackstone Capital Partners VIII and Blackstone Capital Partners Asia funds (BCP VIII and BCP Asia) has entered into an agreement to buy up to ~10.4 crore equity shares (55.3%) of Mphasis from Blackstone Capital Partners VI fund (BCP VI) for ~ Rs. 15216.8 crore. The acquirer is not a part of the seller's promoter group. Further, a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA), University of California Investments and other long-term investors will co-invest along with Blackstone.

Valuation & Outlook

We believe that since the transaction is between two Blackstone funds, it will ensure business continuity, at least for the next few years. In addition, the company will benefit from traction in the Blackstone portfolio (overall opportunity of US$1.5 billion). Further, we believe Mphasis can benefit from cross selling to companies of new investors [Abu Dhabi Investment Authority (ADIA) and University of California Investments]. This, coupled with less exposure to impacted verticals, capability to mine clients effectively, market share gains via vendor consolidation, low legacy exposure and healthy margins prompt us to be positive on the stock. Hence, we maintain our BUY rating on the stock with a target price of Rs. 2030 (22x PE on FY23E EPS) (earlier target price Rs. 1,830).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Mphasis_CoUpdate_Apr21.pdf

Shares of MPHASIS LTD. was last trading in BSE at Rs.1720 as compared to the previous close of Rs. 1725.25. The total number of shares traded during the day was 13557 in over 1412 trades.

The stock hit an intraday high of Rs. 1758.3 and intraday low of 1699.15. The net turnover during the day was Rs. 23279418.

Source : Equity Bulls

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