Mphasis stock slips over 4% amid mixed Q1 results and valuation concerns

For Q1FY25, Mphasis reported a slight 0.1 percent QoQ decline in revenue, falling short of the expected growth rate.

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26 Aug, 2025 12:21

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Mphasis shares declined over four percent on July 29 after brokerages expressed concerns over the stock's high valuations.

As of 1:40 PM, Mphasis shares were trading 3.5 percent lower at Rs 2,924. Over the past month, the stock has surged over 17 percent, outperforming the Nifty 50, which gained only three percent during the same period. Prior to July 21, Mphasis had enjoyed six consecutive weeks of positive returns.

"Mphasis, has run-up sharply (last 1 month 18 percent), and is now trading at 27x FY27 - making the risk-reward profile unattractive," Nuvama said. The brokerage firm reiterated a 'Hold' call on Mphasis, noting that while the company projects above-industry growth for FY25, this target may be overly ambitious. "Mphasis continues to guide for above-industry average growth in FY25, which is a bit stretched in our opinion," Nuvama said. Despite this, the brokerage has raised its target price for Mphasis shares to Rs 3,030 from Rs 2,340.

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Emkay Global has taken a more conservative approach, downgrading Mphasis to 'Reduce' from 'Add'. The brokerage cited the stock's sharp rise and its current valuation as reasons for this cautious stance.

For Q1FY25, Mphasis reported a slight 0.1 percent QoQ decline in revenue, falling short of the expected growth rate. The revenue miss was largely attributed to the completion of healthcare projects and a 7.5 percent QoQ decline in the "Others" segment, according to Emkay Global.

ICICI Securities noted that the much-anticipated turnaround in the BFSI sector did not materialise, with BFSI revenue growth limited to just 1.4 percent QoQ, down from 2.5 percent in Q4 FY24.

Also Read | Mphasis stock climbs to 52-week high on upbeat mgmt commentary, strong deal wins

The company's EBIT margin held steady at 15 percent, but fell short of analyst expectations. The company management has set a margin guidance range of 14.6-16 percent for FY25.

While there are positive indicators, such as a robust deal pipeline and stable margins, the slower growth and delayed BFSI recovery have led ICICI Securities to maintain a cautious outlook with a 'Sell' rating. The brokerage has reduced its target price for Mphasis to Rs 2,020 from Rs 2,050.

Motilal Oswal acknowledged improvements in deal wins but cautioned that the stock's current price limits further upside. The brokerage has adjusted its revenue growth estimates for FY25 and FY26 downward by 190 and 90 basis points, respectively. It reiterated a 'Neutral' rating on the stock with a target price of Rs 2,800.

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