Buy Mphasis; target of Rs 1655: HDFC Securities

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26 Aug, 2025 12:21

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HDFC Securities' research report on Mphasis

We maintain BUY on Mphasis (MPHL), following a strong 2Q performance and high growth visibility ahead. We are positive on MPHL, based on (1) large deal wins (TCV of USD 1bn+ TTM new deal wins with highest-ever TCV in 2Q), with the increasing deal size in NewGen/Digital wins and deal pipeline (+75% YoY) providing high growth visibility, (2) strong BFS portfolio driven by consolidation deals in large accounts as well as the mortgage segment, (3) services re-alignment, integrated deals (Apps, IMS, BPM) and the focus on hyperscaler partnerships have supported 3x growth in cloud deal pipeline (27% and 60% of cloud pipeline includes AWS/Azure channel), and (4) increased focus in Europe geography.

Outlook

MPHL’s valuation discount to midtier IT is expected to reduce, supported by an improving mix of high-growth Direct business limiting the impact from DXC and on FCF yield >6%, ~30% RoIC, FY20-23E EPS CAGR at 14% (16.5% over FY21-23E). Our target price of Rs 1,655 is valued at 20x Sep-22E EPS.

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