Mphasis shares gained 3.4% on Monday following the company's in-line Q1FY27 results, with the stock trading 2.45% higher at ₹2,344 per share as of 1:39 PM on NSE. The stock had earlier gained 3.4% to touch the day's high at ₹2,368.50 in intraday trade, significantly outperforming the Nifty 50's 0.82% gain at 23,963.35. This performance contrasted with the stock's recent volatility, having declined 2.81% over the past week while the Nifty IT index gained 1.19% during the same period. The stock had previously dropped 1.3% to ₹2,235.50 following a 5% surge to ₹2,340 during morning market hours on Friday, indicating mixed investor sentiment despite the initial positive reaction to quarterly results.
According to latest reports, Mphasis reported revenue of ₹4,384.05 crore for Q1 FY27, representing a 17.46% year-on-year increase and 3.33% quarter-on-quarter growth. The company's net profit on a quarter-on-quarter basis fell 3.94% to ₹489.51 crore compared to ₹509.6 crore in the previous quarter (Q4FY26), though profit rose 10.82% year-on-year compared with ₹441.70 crore in Q1FY26. The EBIT margin came in at 14.8% for Q1 FY27, down 60 basis points quarter-on-quarter, with the dip largely attributed to ramp-up costs for new deal wins and TAP acquisition, along with drop in utilization made in anticipation of Q2 growth. Revenue from core operations surged 17.46% year-on-year to ₹4,384.05 crore compared with ₹3,732.49 crore in the same period last year, while Days Sales Outstanding rose to 95 days in Q1 FY27, up 11 days year-on-year, indicating some working capital challenges.
As reported by Business Standard, Mphasis demonstrated strong performance across key verticals, with TMT (Technology, Media and Telecom) vertical up over 15.5% on a quarterly basis due to ramp-up of recent deals, while the Logistics vertical declined 15.7% quarter-on-quarter due to macro and geopolitical uncertainties. Banking and Financial Services, the largest vertical at $248 million, grew a modest 0.8% sequentially, and Insurance slipped 3.1% quarter-on-quarter after four consecutive quarters of strong growth. CEO Nitin Rakesh said the company expects Q2 FY27 to potentially be its strongest quarter in three years, with full-year guidance of high single-digit to low double-digit growth maintained alongside an 80% net income-to-operating cash flow conversion target. The management expects margins to range in the target band of 14.75% to 15.75% while maintaining 80% conversion of net income to operating cash flow. According to ICICI Securities, the company is expected to deliver best sequential CC growth in last three years (implying at least ~3% QoQ CC) in Q2.
As reported by The Hindu BusinessLine, Mphasis maintained robust deal acquisition during the quarter with total contract value (TCV) of new deals rising to $461 million, including three large deals, one of which exceeded $100 million, taking its trailing twelve-month TCV above $1.8 billion. The company's AI-led pipeline now accounts for 70% of the overall pipeline — up from 12% in mid-2024, with 63% of TCV wins being AI-led. Management noted that the AI-led pipeline grew 8% sequentially and 28% year-on-year, while the overall pipeline grew 8% sequentially and 28% year-on-year. The company's newly launched AI platform Mphasis TRIA contributed significantly to this momentum, with management highlighting that 'Enterprise AI is the gap we are filling' and that the company's platform-led strategy was validating faster than initially projected. According to NDTV Profit, CEO Nitin Rakesh described the current phase of enterprise AI adoption as the 'second innings', with companies moving beyond evaluating AI tools to building infrastructure that can support long-term business outcomes.
As reported by Business Standard, Nomura has revised its FY27-28 earnings per share (EPS) estimates by around 1-4% after factoring in the latest quarterly results and maintained a Buy rating on the stock with a marginally cut target price to ₹2,620 from ₹2,640. The brokerage noted that while the growth was driven by the TMT vertical, margin pressures weighed on profitability, with the EBIT margin at 14.8% down 60 basis points quarter-on-quarter. Prabhudas Lilladher had previously issued a 'Buy' rating with a target price of ₹2,820, maintaining confidence in the company's growth trajectory. The brokerage noted that MPHL delivered a healthy Q1FY27 performance with revenue growth of 2.1% QoQ CC, above their estimate of 1.3%, driven by continued ramp-up of large deals and incremental contribution from OKIN integration. However, Prabhudas Lilladher reduced FY27E/FY28E EBIT margin estimates by 10bps each to 15.3%/15.4% and lowered the target multiple to 22x FY28E EPS (23x earlier), resulting in a 2.9%/1.4% cut to FY27E/FY28E EPS estimates. ICICI Securities has now recommended a 'Buy' rating on the stock with a target price of ₹2,640, based on 20.5x FY28E EPS, noting that while EBIT margin stood at 14.8%, near the lower end of its guidance (14.75%-15.75%), we envisage a likely uptick in margins through the year as revenue scales.
