Motilal Oswal's research report on Mphasis
Mphasis (MPHL)’s 3QFY25 revenue was 0.1% QoQ in Constant Currency (CC), in-line with our estimate of 0.2% QoQ CC. Direct business grew 0.2%/5.1% QoQ/YoY in CC, aided by Insurance and TMT. TCV was up 70% QoQ to USD351m. EBIT margin stood at 15.3%, in-line with our estimate of 15.2%. PAT came in at INR4.2b (up 1.1%/14.5% QoQ/YoY) vs. our estimates of INR4.3b. For 9MFY25, net revenue/EBIT/PAT grew 6.6%/6.7%/8.1% compared to 9MFY24. We expect revenue/EBIT/PAT to grow 8.9%/15.9%/17.6% on 4QFY25 YoY. MPHL targets a sustainable operating (EBIT) margin within the stated band of 14.6%-16%. We reiterate our Neutral rating on the stock.
Outlook
We expect a USD revenue CAGR of ~7.9% and an INR PAT CAGR of ~11.5%. We value the stock at 28x FY27E EPS with a TP of INR3,200. We reiterate our Neutral rating on the stock.
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