Motilal Oswal's research report on Mphasis
Mphasis (MPHL)’s 1QFY25 revenue was flat QoQ in constant currency (CC), which was weaker than our estimate (+1.2% QoQ CC). Direct business grew 0.3%/4.1% QoQ/YoY in CC, aided by Insurance and BFS. The TCV jumped 80% QoQ to USD319m due to the low base of 4QFY24 at USD177m. EBIT margin stood at 15%, missing our estimate by 30bp QoQ. PAT came in at INR4.0b (up 3% QoQ) vs. our estimate of INR4.2b, led by higher SG&A and cost of delivery.
Outlook
We expect a USD revenue CAGR of ~7.6% and an INR PAT CAGR of ~12.5%. While we raise our target multiple to 27x FY26E EPS (10% premium to the five-year average), we believe there is a limited upside from hereon. Our TP of INR2,800 implies 7% downside. We reiterate our Neutral rating on the stock.
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