7 MPHASIS share price target reports by brokerages below. See what is analyst's view on MPHASIS share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Mphasis results were slight better than our estimates on revenue & margin front. Revenue declined 4.5% QoQ (-4.6% cc) to USD 305 mn (Ple/cons.: USD 301 mn/ USD 299 mn) aided by Direct International (DI; -0.5%), while DXC dipped (-12.6%). Despite steep revenue dip, EBIT margin in Q1 eroded marginally by 65 bps to 15.7%. The margin has been resilient at ~16% for past two years. We believe investors’ concern of DXC overhang impacting on overall growth will fade as it accounts to just 20% of revenues now. Deal pipeline was the highlight for the quarter- New deal wins highest ever at $259mn, +29% QoQ, +72% YoY. It includes a large deal win of US$105mn. In addition, the company signed another large deal of $216mn deals in July, from an existing non-banking client. TTM order intake stood at US$823mn vs US$715mn in last qtr. We have been highlighting Mpahsis investments into sales engine & their focus on scaling the select accounts which is now yielding into strong deal wins. We expect strong deal flow to continue which will provide pivot for growth in FY21/22E.We have increased our estimates by 2.6%/1% for FY22/23E & now it trades at 15.3x/14x at EPS of Rs.73/80 respectively. We now assign 17X (earlier 13X) (Sep-22) earnings multiple & arrive at changed TP of Rs.1302 (earlier: Rs. 943). Upgrade to Buy from Accumulate.
Deal wins (USD 201mn) during the quarter were healthy, 12% above the 4 quarter rolling average. 4QFY20 revenue growth at 1.5% (QoQ, CC) was marginally behind our estimates, as weakness in DXC channel overshadowed the healthy performance in Direct. Near term outlook remained soft as clients reprioritize/defer some IT spends. Despite that, healthy order book, high exposure to relatively stable verticals, and new client additions, should help MPHL navigate these challenges. We upgrade our FY21/22E EPS by ~8%/6%, largely driven by (a) adjustments to our exchange rate assumptions and (b) EBIT Margin estimates (over FY21- 22E). Maintain Neutral.
Positives outweigh the risks Maintain ADD on Mphasis supported by in-line 4Q rev and operating performance. Despite DXC-HP portfolio underperformance & uncertainty, (1) Continuity of strong growth vectors in Direct Core, (2) Industry tailwinds in Digital Risk, and (3) Attractive valuations (11.7x FY22E with FCF yield >10%, Dividend yield >4% and RoIC >25%) support our constructive stance. Our TP of Mphasis is Rs 825, at 12x FY22E EPS.
The company reported a healthy Q4FY20 performance. Although in the near term we expect revenues to be impacted by pressure in BPS business, DXC channel, we expect deal wins in direct international to partly offset near-term challenges. Also, we expect deals to ramp up in H2FY21E. As most deal wins by the company have higher proportion of digital business, we expect accelerated growth in medium term. Further, healthy balance sheet could help the company in inorganic revenue growth opportunities. This coupled with healthy capital allocation prompt us to upgrade the stock from HOLD to BUY with a revised target price of Rs 930 (13x FY22E EPS)
We expect Mpahsis to post ~12/11% growth in revenues for FY21E/22E & our EBIT margin estimates stands at ~16.6% for FY21E/22E. Direct Core remains the key driver of growth. Good growth in the core business and growing revenue contribution from the Blackstone portfolio provide visibility on growth, along with steady deal wins. We have fine tune our estimates & value Mphasis at 15x (unchanged) Sep-21 earnings to arrive at revised target price of Rs1094. The stock currently trades at attractive valuation of 10.8x/9.7x FY21E/FY22E earnings.
Mphasis has reported healthy growth in Q3FY20 mainly led by Direct International channel. We believe the robust growth in Direct International to continue to drive overall revenue growth led by higher deal wins, higher focus on new gen technologies and focus on wining deals upstream. In addition, the company has multiple levers to improve margins like higher fixed price projects, automation, IP platforms and pyramid rationalisation. However, challenges at DXC could keep revenue and margin under pressure. Hence, we maintain our HOLD rating on the stock with a revised target price of |1050/share (15x FY22E P/E). Key risk to the company is high exposure to BFSI segment.
The management outlook on above industry growth rate in direct core and in line growth in DXC/HP channel indicates healthy revenue visibility. In addition, a healthy client base, strong TCV (29.9% CAGR in FY17-19) and strong growth in digital/next gen (36% CAGR in FY17-19) provide further proof points. Accordingly, we estimate rupee revenue CAGR of 11.7% (FY19-21E) and EBIT margin of 16.2% in FY21E. However, most positives are already factored in the valuation. Hence, we assign a HOLD rating to the stock. We value Mphasis at 16x P/E on an estimated EPS of ~Rs 69.1/share (FY21E) with a target price of Rs 1100. Key risk to the company is high exposure to BFSI segment where IT spending is under pressure.
Company being technology-oriented is working on various IPs which willhelp company in the long-term. Also the maintenance of EBIT margin in the band of 15.5-17% in coming years will be possible with cost optimization program which is being implemented for the past six quarters. Thus, we recommend a “BUY” rating with target price of Rs.1239, an upside potential of 29% based on its 3 year historical average target PE of 18.2x to its FY21E EPS of Rs. 68.11.
New Gen capabilities - Strategic pillars for future growth & profitability Mpahsis has been one of the few mid-tier IT company over the last few quarters which has not seen in downward revision on margins, growth visibility is stable & it has best cash generation among its peers & RoE in excess of 20%. We expect Mpahsis to post 11/12% growth in revenues for FY20E/21E & our EBIT margin estimates stands at ~16.6% for FY20E/21E. We believe recovery in digital business will be gradual while direct core business will be the key growth driver. Good growth in the core business and growing revenue contribution from the Blackstone portfolio provide visibility on growth. We have fine tune our estimates & value Mphasis at 15x FY21E earnings to arrive at revised target price of Rs1042. The stock currently trades at attractive valuation of 14.8/12.7x FY20E/FY21E earnings.
Growth vectors intact We maintain BUY on Mphasis following an in-line 1Q. Growth drivers in the Direct Core channel (key to our optimism) are intact and sustainable. Mphasis is the most attractively valued midcap IT stock in India (13x FY21E). Our TP of Rs 1,310 values it at 18x Jun-21E EPS.
Our estimates are largely unchanged post the results. MHPL has been among the few mid-tier IT companies over the last few quarters, where  growth visibility has been intact, and it continues to grow revenues in low-to-mid teens and  margin estimates have not seen a downward revision (in part due to the already low base). It has amongst the best cash generation (In the top quartile of Midcap IT) and RoE in excess of 20%. We estimate CC revenue CAGR of 12.5% and EPS CAGR of 13% over FY19-21. Our price target of INR1,120 discounts forward earnings by 15x, implying an upside of 20%. Hence, we upgrade our rating to Buy.
We expect Mpahsis to post 11/12% growth in revenues for FY20E/21E & our EBIT margin estimates stands at ~16.6% for FY20E/21E. We believe recovery in digital business will be gradual while direct core business will be the key growth driver. Good growth in the core business and growing revenue contribution from the Blackstone portfolio provide visibility on growth. We have fine tune our estimates & value Mphasis at 15x FY21E earnings to arrive at revised target price of Rs1042. The stock currently trades at attractive valuation of 14.8/12.7x FY20E/FY21E earnings.
Mphasis is the only mid-cap company whose operating metrics and order wins give us comfort about sustained growth performance in FY20e. The strong TCV and differentiated client relationships (HP and Blackstone offer large opportunities) are also the reasons for our higher-than-consensus growth estimates. We have a Buy rating on the stock, with a TP of Rs 1,220, valuing it at 17x FY21E earnings.
We expect Mpahsis to post 11.7/11.5% growth in revenues for FY20E/21E & our EBIT margin estimates stands at ~16.6% for FY20E/21E. We believe recovery in digital business will be gradual while direct core business will be the key growth driver. We value Mphasis at 15x FY21E earnings to arrive at revised target price of Rs1111. The stock currently trades at attractive valuation of 14.7/12.9x FY20E/FY21E earnings.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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