Mphasis surges 12%, hits new high on strong June quarter results

Mphasis won a total contract value (TCV) of $505 million in Direct business during the quarter, the highest ever in the history of the company

Shares of Mphasis rallied 12 per cent to hit a new high of Rs 2,692.35 on the BSE in intra-day trade on Friday after the company reported a healthy set of June quarter (Q1FY22) numbers. The company is an Information Technology (IT) solutions provider specialising in cloud and cognitive services.

Its revenue increased 6.8 per cent quarter-on-quarter (QoQ) and 16.1 per cent year-on-year (YoY) to $362.9 mainly led by a 10.8 per cent QoQ increase in Direct revenues (91 per cent of revenues). In Constant Currency (CC) terms, growth was at 5.9 per cent QoQ and 16.3 per cent YoY.

EBIT (earnings before interest tax) margin declined by 20 basis points (bps) QoQ to 15.9 per cent. Profit after tax (PAT) increased 7.2 per cent QoQ to Rs 339.7 crore mainly due to higher other income.

Mphasis reported a total contract value (TCV) of $505 million in Direct business during the quarter, the highest ever in the history of the company. Of the TCV, 85 per cent were in new-gen services. This includes a single landmark deal win of $250 million.

“Apart from reporting a healthy quarter, the company’s deal wins remains healthy on QoQ and YoY basis ($ 505 million in Q1FY22 vs $245 in Q4 FY21 & $259 in Q1FY21). In addition, the company’s net addition remains healthy. This coupled with management stability, improving deal size, market share gains via vendor consolidation, low legacy exposure, exposure to lesser impacted vertical and healthy margins prompt us to be positive on the stock,” ICICI Securities said in a note.

The stellar growth in the Direct channel (+9.8 per cent QoQ CC; +32.5 per cent YoY CC) was encouraging, however, the strong momentum was partially offset by an 18.1 per cent QoQ/48.7 per cent YoY decline in the DXC business, Motilal Oswal Financial Services noted.