MphasiS margins to stabilise in couple of quarters

Mid-sized Indian outsourcer MphasiS expects operating margins to stabilise at 20-21% in the next two quarters, its chief financial officer told Reuters on Friday, a day after the company posted a 15% decline in January-quarter profit.

Shares of the Bangalore-based company plunged as much as 27% to Rs 458, their lowest in nearly 19 months. They later pared some losses to trade down 21.63% at Rs 491.

"Margins are quite low. We have certain levers like utilisation, which has fallen drastically, which we will use to improve margins," Ganesh Murthy said.

"Subject to exchange rate fluctuations, in a couple of quarters we should be able to stabilise."

MphasiS, which follows a November-October financial year, had clocked January-quarter operating margins of 18%, down from 21.9% in the October quarter.

On Thursday, MphasiS posted a consolidated net profit of Rs 230 crore compared with Rs 270 crore a year ago.

Brokerage CLSA cut its FY12 profit forecast for MhpasiS by 25-27% and maintained its "sell" rating on the stock, expecting a steady deterioration in the financials of the company.