Neutral Mphasis; target of Rs 2900: Motilal Oswal

Motilal Oswal's research report on Mphasis

Mphasis’s (MPHL) 2QFY26 net revenue rose 1.2% QoQ in Constant Currency (CC), largely in line with our estimate of 1.5% QoQ CC. Direct revenue rose 2.2% QoQ CC and 7.9% YoY CC. TCV rose 155% YoY to USD528m. EBIT margin stood at 15.3%, in line with our estimate of 15.3%. PAT came in at INR4.7b (up 6.2%/10.8% QoQ/YoY), in line with our estimate of INR4.7b. For 1HFY26, net revenue/EBIT/PAT grew 9.7%/10.3%/10.0% YoY in INR terms. We expect revenue/EBIT/PAT to grow 11.2%/12.3%/14.9% YoY in 2HFY26. MPHL targets a sustainable operating (EBIT) margin within the band of 14.75-15.75%. While deal wins has been consistent and execution is encouraging, the pace and consistency of conversion remain the key monitorables. We reiterate our Neutral rating on the stock.

Outlook

We expect a USD revenue CAGR of ~8.1% and an INR PAT CAGR of ~12%. We value the stock at 26x Jun’27E EPS with a TP of INR2,900. We reiterate our Neutral rating on the stock.

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