Synopsis:
The shares of Mphasis are in focus after Morgan Stanley projects a 33% upside in the stock, citing numerous business improvements.
With a market capitalization of Rs 52,033 crores, the shares of Mphasis Ltd are currently trading at Rs 2,735 per share, down by 15.6 percent from its 52-week high of Rs 3,239.55 per share. Over the past five years, the stock has delivered a return of 134 percent.
Leading global brokerage firm Morgan Stanley upgraded Mphasis from Equalweight to Overweight, raising its target price from Rs 2,650 to Rs 3,500 per share, signalling an upside potential of 33 percent from its previous day closing price of Rs 2,625 per share.
The brokerage pointed out four major positives, including a solid go-to-market strategy, a rebound in the logistics sector, an increasing deal pipeline, and improved revenue conversion. According to them, these elements contribute to a brighter growth outlook and stronger quarterly performance.
The brokerage has increased its EPS estimates for FY27 and FY28 by 5.7 percent and 5.2 percent, respectively, and adjusted its price target based on a 30x P/E multiple using estimates from June 2027. They now consider Mphasis their top pick in the mid-cap IT space, believing it has more upside potential than Coforge.
Financial Highlights
Mphasis reported a revenue of Rs 3,732 crore in Q1 FY26, up by 9 percent from its Q1 FY25 revenue of Rs 3,422 crore. On a quarterly basis, it increased by 0.59 percent from Rs 3,710 crore.
Coming to its profitability, it reported a net profit of Rs 442 crore in Q1 FY26, up 9 percent from Rs 405 crore in Q1 FY25. On a quarterly basis, it declined by 0.89 percent from Rs 446 crore.
The stock of the company has delivered an ROE and ROCE of 18.22 percent and 22.71 percent respectively, and is currently trading at a P/E of 29.68x as compared to its industry average of 27.54x.
Mphasis Limited is a worldwide IT solutions provider that specializes in cloud computing, AI, cybersecurity, automation, and digital services across various sectors, including banking, insurance, logistics, telecom, and healthcare.
The company operates through different segments like Banking & Financial Services, Logistics, Technology & Telecom, Insurance, and Others, serving clients in regions such as the U.S., India, Europe, and the Middle East.
Mphasis delivers its services through the Mphasis XaaP platform, which caters to industries like retail banking, wealth management, travel, life sciences, energy, and manufacturing.
Written by Satyajeet Mukherjee
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