Mphasis shares decline 2% on muted March quarter performance

Mphasis Q4 results: Net profit margins contracted from 15.06 per cent in the year ago period to 12.56 per cent in the quarter under study. The margin also declined 60 bps on sequential basis

Shares of mid-tier information technology (IT) firm Mphasis slipped 1.8 per cent in Friday's intra-day deals on the BSE to Rs 1,764 apiece after the company reported a muted set of numbers in March quarter of fiscal year 2020-21 (Q4FY21). At 11:00 AM, the stock was quoting 1.2 per cent down at Rs 1,776 per share on the BSE as against a 0.09 per cent rise in the benchmark S&P BSE Sensex. The S&P BSE IT index, meanwhile, eased 0.74 per cent.

During the period under review, the company's gross revenue grew 1.8 per cent sequentially and 6.7 per cent year-on-year (YoY) to Rs 2,556.87 crore. In Constant Currency (CC) temrms, growth was 2 per cent QoQ and 4.9 per cent YoY. Of this, direct revenue grew 3.1 per cent QoQ and 21.3 pr cent YoY on a reported basis. In Constant Currency, revenue grew 3.5 per cent QoQ and 19.9 per cent YoY. The DXC revenues, on the other hand, fell by 7.2 per cent on a sequential basis. 

The bottomline, however, shrunk 2.6 per cent sequentially to Rs 316.9 crore, excluding one-time income tax benefit of Rs 42.4 crore in Q4FY20. Net profit margins contracted from 15.06 per cent in the year ago period to 12.56 per cent in the quarter under study. The margin also declined 60 bps on sequential basis.

Meanwhile, Mphasis clocked new total contract value (TCV) wins of $245 million in Q4FY21 in Direct; of which 69 per cent was in new generation services. In addition, the company closed a landmark deal of $250 million in Q1FY22.

"The accelerated digital transformation journey for businesses globally has translated to continued growth for Mphasis in FY 21. This has been a break-out year in terms of growth. Mphasis has recorded the highest ever TCV wins in Direct of $1,112 million and our Direct Business growth of 22.5 per cent on a reported basis, was a historical high. Our engineering-led DNA and client centricity has helped us stay consistent with our performance and we continue to invest in accelerating our targeted go-to-market and delivery guilds," said Nitin Rakesh, Chief Executive Officer and Executive Director of Mphasis.

For the full FY21, the Bengaluru-based IT firm's gross revenue grew 9.8 per cent and 4.9 per cent in Constant Currency while the net profit grew 2.7 per cent to Rs 1,216.8 crore. Mphasis Board of Directors recommended a dividend of Rs 65 per share, including a special dividend of Rs 27, for FY21. 

Mphasis Limited is an IT services company that provides infrastructure technology and applications outsourcing services, as well as architecture guidance, application development and integration, and application management services.