Synopsis:
Morgan Stanley recommends Mphasis Limited with a target of ₹3,625, implying 30.10% upside potential.
This Mid-cap IT stock, engaged in providing information technology services, including application development, cloud computing, digital transformation, and business process outsourcing, jumped 5 percent after Morgan Stanley gave a target of Rs. 3,625, which has an upside potential of 30.10 percent.
With a market capitalization of Rs. 55,500.29 crores, the share of Mphasis Limited has reached an intraday high of Rs. 2,926.15 per equity share, rising nearly 5.02 percent from its previous day’s close price of Rs. 2,786.40. Since then, the stock has retreated and is currently trading at Rs. 2,917.20 per equity share.
What is the news?
Morgan Stanley, a prominent brokerage firm, has recommended Mphasis Limited with a target price of Rs. 3,625 per share, up from Rs. 3,500 earlier, indicating an upside potential of 30.10 percent from its previous day’s close price of Rs. 2,786.40.
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Rationale:
Morgan Stanley believes Mphasis Limited is preparing for a strong breakout, supported by both internal and external factors. The company has been consistently building its pipeline and winning larger deals, currently in the range of $300–400 million per quarter, with scope to expand outside its key banking and financial services (BFSI) vertical.
Opportunities in healthcare and other industries provide further room for diversification, reducing dependence on its top 10 clients. Additionally, potential interest rate cuts could lift demand for digital risk (DR) services, providing another growth option.
The brokerage also sees the possibility of a promoter stake sale in the next two to three years as a potential catalyst for the stock. Morgan Stanley has raised revenue growth estimates by 50 basis points for FY27 and 100 basis points for FY28.
Company Overview:
Mphasis Limited is an Indian multinational information technology service and consulting company headquartered in Bengaluru. It offers infrastructure technology, application outsourcing, architecture guidance, application development, integration, and management services.
The company serves various industries, including financial services, telecom, logistics, and technology. Mphasis is known for its next-generation technology services focusing on cloud, cognitive services, and digital enterprise automation. It has a global presence with over 60 sales and delivery centers worldwide.
Recent quarter results:
Coming into financial highlights, Mphasis Limited’s revenue has increased from Rs. 3,422 crore in Q1 FY25 to Rs. 3,732 crore in Q1 FY26, which has grown by 9.06 percent. The net profit has also grown by 9.14 percent from Rs. 405 crore in Q1 FY25 to Rs. 442 crore in Q1 FY26.
Mphasis Limited’s revenue and net profit have grown at a CAGR of 9.98 percent and 7.51 percent, respectively, over the last five years. In terms of return ratios, the company’s ROCE and ROE stand at 22.7 percent and 18.2 percent, respectively. Mphasis Limited has an earnings per share (EPS) of Rs. 89.55, and its debt-to-equity ratio is 0.12x.
Written By Nikhil Naik
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