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Motilal Oswal's research report on Mphasis

Mphasis (MPHL)’s 4QFY25 gross revenue was 2.9% QoQ in Constant Currency (CC), in line with our estimate of 3.0% QoQ CC. Direct business grew 3.8%/6.8% QoQ/YoY in CC, aided by BFS and TMT. TCV was up 11% QoQ to USD390m. EBIT margin stood at 15.3%, in line with our estimate of 15.4%. PAT came in at INR4.5b (up 4.4%/13.6% QoQ/YoY), in line with our estimate of INR4.5b. For FY25, net revenue/EBIT/PAT grew 6.7%/8.0%/9.5% YoY in INR terms. We expect revenue/EBIT/PAT to grow 11.2%/10.9%/11.3% YoY in 1QFY26. MPHL targets a sustainable operating (EBIT) margin within the band of 14.75-15.75% (vs. 14.6-16% earlier). We reiterate our Neutral rating on the stock.

Outlook

Our estimates are largely unchanged. Over FY25-27, we expect a USD revenue CAGR of ~9.7% and an INR PAT CAGR of ~10.2%. We value the stock at 25x FY27E EPS (earlier 23x) with a TP of INR 2,700. We reiterate our Neutral rating on the stock.

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Mphasis - 28042025 - moti

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