Prabhudas Lilladher's research report on Mphasis
Mpahsis reported revenue growth of 1.8% in dollar terms at $297mn (Ple: $300mn) & cc growth of 2% QoQ (Ple:3.0%). De-growth in insurance & ICE led to slight miss on revenues. EBIT margins declined by 34 bps sequentially to 15.5% and below our expectations (Ple: 15.6%), within their target band of 15%-17%. HP channel has shown strong performance in FY18/FY19 & contribution of HP channel now accounts to 28.4% of the total revenues. HP channel has posted strong growth of 2.5% QoQ & 16.5% YoY CC driven by continued participation in service transformation deals.
Outlook
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.
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