Reduce Mphasis; target of Rs 2540: Emkay Global Financial

Emkay Global Financial recommended reduce rating on Mphasis with a target price of Rs 2540 in its research report dated December 06, 2023.

Broker Research

December 07, 2023 / 12:34 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

Emkay Global Financial's research report on Mphasis

We interacted with Nitin Rakesh (CEO) and Manish Dugar (CFO) to gauge demand trends and delve deeper into the company’s strategy. Key takeaways: i) The weakness in mortgage due to sharp increase in interest rates, the decline in DXC, stress in the banking sector and challenging macros have impacted performance in the last six quarters. Most of these headwinds are showing signs of bottoming out. ii) Mphasis has not lost wallet share in major accounts and continues to be among the two top vendor partners in its top-5 accounts. It plans to replicate the success of its top-10 accounts, in scaling the next 20. iii) It is focusing on diversifying growth outside the top-10 clients, America and BFSI. iv) Q3 growth is likely to be lower than the management’s earlier expectations due to slower deal-to-revenue conversion, clients pushing for higher furloughs, and seasonal factors weighing on contribution from Silverline which may pose downside risk to our current growth assumptions.

Outlook

The management indicated that growth recovery is under way, but its pace hinges on the improvement rate in macros. We roll forward to Dec-25E EPS and maintain REDUCE, with TP of Rs2,540/sh at 23x Dec-25E EPS.

For all recommendations report, click here