Emkay Global Financial has given Buy recommendation for Mphasis with a target price of Rs. 2800 in its research report issued on Aug 23, 2022

Emkay Global Financial’s research report on Mphasis

Deal win momentum, deal pipeline buildup, and client conversation remain steady. The company highlighted pockets of weakness – mortgage, deferment in spending on horizon-3 initiatives, and furloughs announced by few clients – which may weigh on near-term growth. Focus on proactive large deal origination, steady expansion in competencies, client mining, new logo additions, and steady increase in deal sizes and tenure led to healthy deal TCV wins and revenue conversion. The company expects Q2 growth to be better than Q1. Mphasis remains confident of delivering EBITM within the guided range of 15.25-17% for FY23. EBITM was 15.3% in Q1 and is expected to remain stable with an upward bias, considering better utilization, offshore shift, flattening pyramid, pricing benefits, and lower ESOP charges.

Outlook

Weakness in mortgage business and furloughs in few accounts are likely to weigh on near-term revenue growth. We retain Buy with a TP of Rs2,800 at 25x Jun’24E EPS, given continued wallet share gains and steady expansion in addressable markets with competency build-up.

More Info

At 14:23 hrs MphasiS was quoting at Rs 2,201.20, down Rs 19.55, or 0.88 percent.

It has touched an intraday high of Rs 2,245.65 and an intraday low of Rs 2,200.00.

It was trading with volumes of 14,375 shares, compared to its thirty day average of 29,867 shares, a decrease of -51.87 percent.

In the previous trading session, the share closed down 1.92 percent or Rs 43.55 at Rs 2,220.75.

The share touched its 52-week high Rs 3,659.75 and 52-week low Rs 2,071.60 on 19 October, 2021 and 15 July, 2022, respectively.

Currently, it is trading 39.85 percent below its 52-week high and 6.26 percent above its 52-week low.

Market capitalisation stands at Rs 41,460.58 crore.

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