Buy Mphasis; target of Rs 3310: Prabhudas Lilladher

Prabhudas Lilladher's research report on Mphasis

We are upgrading MPHL to ‘BUY’ led by steady and consistent performance, attributed to an elevated deal TCV and robust conversion. Despite the fact the deal funnel seems to be encouraging for both BFS (+45% YoY) and non-BFS (+139% YoY) in Q2FY26. More importantly, the pain within Logistics & Transportation (L&T) has subsided, the vertical performance should see a progressive turnaround through H2FY26 and FY27, driven by focused investment in potential accounts. Ex-L&T, USD revenue grew by 15.7% YoY in H1FY26, during which L&T saw ~55% YoY decline. Ex-L&T, USD revenue reported a CQGR of 3.5% and 2.5% over the past 4 and 8 quarters, respectively, which is encouraging considering the current volatile environment.

Outlook

Given its relative outperformance and 15% earnings CAGR over FY26-28E, we are upgrading PE multiple to 27x (25x earlier) with TP of Rs. 3,310. Upgrade to ‘BUY’ (‘Accumulate’ earlier).

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