MphasiS Q2 net down 6.8% at Rs 177 crore

The company which follows November-October financial year saw its revenue growing 5.8% to Rs 1,405 crore as against Rs 1,328 crore during same period last year

Bangalore-based  IT services company MphasiS reported a 6.8% decline in its consolidated net profit at Rs 177 crore in its financial second quarter ended April 31, 2013 when compared with the same period last year.

The company which follows November-October financial year saw its revenue growing 5.8% to Rs 1,405 crore as against Rs 1,328 crore during the same period last year.

The mid-tier company attributed the decline in net profit to lower other income since it could not get the interest benefit from the fund that were deployed for the acquisition of Digital Risk as well as towards the payment of dividend.

It also said the increase in effective tax rates to 25.1% due to higher tax rates applicable on Digital risk profits, increase in tax surcharge in India and expiry of the initial five year tax holiday in centers located in SEZ also impacted its profitability negatively.  

In three month (February-April) period, the company's direct channel revenue  grew by 37.7% to Rs 775 crore. The company also said that the direct channel contribution has crossed 50% of its total revenue.

MphasiS's direct sales versus HP business mix at the end of the Q2 stood at is at 54:46 as compared to 48:52 in the first quarter of  the current fiscal. Direct channel revenue now represent an annual run rate of $572 million.

Operating margins for the quarter stood at 14.7% down from 15.5% in Q1 on account of the integration of lower margin Digital Risk.

“We are witnessing good traction in the direct business in the US with a growing pipeline testimony to our hyper-specilaisation approach. The acquisition of Digital Risk has also gone well,” said Ganesh Ayyar, CEO, MphasiS.

“We have won a large $60 million TCV contract from a BFSI client with potential upside of $40 million based on further volume. We are enthused by growth prospects going forward,” Ayyar added.

During the second quarter, the company witnessed a total client addition of 21 out of which around 10 new logos were added through its direct business. Earnings per share stood at Rs 8.4 as against Rs 8.8 in Q2 and Rs 9 during the same period last year.

The shares of the company on the BSE closed at Rs 447.04, up 2.63% as against previous day's close.