Mphasis share pops 3% as Jefferies initiates with 'Buy', sees 21% upside

Mphasis share price: Information technology (IT) company major Mphasis shares were in demand on Monday, January 6, 2025, as the scrip gained up to 3.03 per cent to hit an intraday high of Rs 2,955.65 per share. 

 

The northward move in Mphasis share price came after New York-based financial services company Jefferies initiated coverage with ‘Buy’ for a target price of Rs 3,460 per share. The target price reflects 20.6 per cent upside from the previous close of Rs 2,868.70 on January 3, 2025.

 

According to reports, Mphasis is seen as a key beneficiary of the improving US economic conditions and the growing demand within the Banking, Financial Services, and Insurance sectors. The company's growth outlook is positive, with projected compound annual growth rates of 10 per cent in constant currency revenue and 14 per cent in earnings per share from fiscal years 2025 to 2027, despite the ongoing recovery in the IT sector. 

 

 

The reports also highlight that declining US interest rates are driving growth in the mortgage segment, which is a key area for Mphasis.

 

Mphasis Q2 financial performance 

 

Mphasis reported a strong financial performance for the quarter ended September 30, 2024 (Q2FY25). Gross revenue increased 3.1 per cent Q-o-Q and 7 per cent Y-o-Y in Q2FY25 on a reported basis, with growth of 2.4 per cent Q-o-Q and 5.4 per cent Y-o-Y in constant currency. 

 

Direct revenue saw a growth of 3.2 per cent Q-o-Q and 7.9 per cent Y-o-Y on a reported basis, and 2.4 per cent Q-o-Q and 6.2 per cent Y-o-Y in constant currency. 

 

The company secured new total contract value (TCV) wins of $207 million in Q2FY25, with 88 per cent of these wins coming from new-generation services. The reported operating margin stood at 15.4 per cent. 

 

Overall, the net profit grew 4.7 per cent Q-o-Q and 8 per cent Y-o-Y to Rs 423.3 crore, while earnings per share (EPS) rose 4.6 per cent Q-o-Q and 7.7 per cent Y-o-Y to Rs 22.4 in Q2FY25.

 

On Q2 financial performance, Nitin Rakesh, chief executive officer, and managing director, Mphasis said, “Despite many ongoing challenges, the macro environment continues to trend in the right direction. We are witnessing increased AI adoption across clients to address enterprise challenges with higher efficiency and accuracy, beyond cost advantage. Savings led transformation TM thesis is core to all our deal archetypes and solutions, thus significantly enhancing service delivery and savings for clients.”

 

About Mphasis 

 

Mphasis is a global IT solutions company offering a wide range of services, including application development and integration, business process outsourcing, infrastructure services, cloud and cognitive services, technology practices, consulting, remote monitoring, human resource outsourcing, data center services, and network services. 

 

Headquartered in Bengaluru, India, Mphasis was formed in 1992 through the merger of the US-based IT consulting company MphasiS Corporation and the Indian IT services firm BFL Software Limited. The company operates in 21 countries and serves clients across diverse industries.

 

Mphasis caters to a broad spectrum of industries, including banking, capital markets, healthcare, life sciences, manufacturing, communications, media and entertainment, retail, transportation, government, and energy and utilities. The company provides various transformation services, such as Front2BackTM Transformation, which leverages cloud and cognitive technologies to create personalised digital experiences, and Service Transformation, using digital tools to help businesses adapt to a constantly evolving landscape. 

 

Additionally, Mphasis focuses on operational optimisation, applying a low-investment approach to help clients reduce costs by 50–70 per cent.

 

The market capitalisation of Mphasis is Rs 55,037.56 crore, according to BSE. The company falls under the BSE200 category. 

 

At 10:52 AM, the Mphasis share was trading 1.16 per cent higher at Rs 2,901.95. In comparison, BSE sensex was trading 0.58 per cent lower at 78,760.28 levels.