Mphasis - Q1 FY22 Result Report - YES Securities

(Rating: ADD, TP: Rs2,850, Upside: 12.6%)

- Reported revenue of Rs 26,008 mn up 6.6% QoQ), which was above estimate. The growth was led by Direct revenue which grew by 10.8% QoQ. On the other hand, DXC revenue declined by 17.7% QoQ and now forms 9% of revenue

- EBIT margin declined by 20 bps QoQ to 15.9% in line with estimates as wage hike impact was mitigated through reduction in SG&A.

- Robust deal booking as of $505 mn in the quarter (up 92% YoY) with 85% of deal wins in new Generation services.

- Direct segment continues to power the revenue growth as deal booking remains strong and offers strong revenue growth visibility. The contribution from DXC segment would continue to decline and expected to settle at mid to high single digit revenue contribution. Margin pressure likely to increase with higher attrition going ahead. The valuation remains stretched as it trades at PE of 28x on FY23 earnings. We maintain ADD Rating on the stock, with revised target price of Rs 2,850.

Shares of MPHASIS LTD. was last trading in BSE at Rs. 2596 as compared to the previous close of Rs. 2590.15. The total number of shares traded during the day was 30949 in over 3664 trades.

The stock hit an intraday high of Rs. 2618.4 and intraday low of 2562.75. The net turnover during the day was Rs. 80366728.

Source : Equity Bulls

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