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Shares of IT company Mphasis were in the news on Monday. The stock rose 3.03% to touch an intraday high of ₹ 2,955.65. The reason for this rise is Jefferies' announcement of 'Buy' rating and target price of ₹ 3,460. According to Jefferies' report, Mphasis is going to benefit greatly from the improving US economy and the growing demand in the banking, financial services and insurance (BFSI) sector.
The company estimates revenue growth at 10% CAGR and earnings per share (EPS) growth at 14% CAGR between FY 2025 and 2027. Falling US interest rates are driving growth in the mortgage segment, which is a key business for Mphasis.
Strong performance in Q2FY25
The company set several records in the quarter ended September 2024 (Q2FY25):
Mphasis performed well in Q2FY25, reporting a 3.1% quarter-on-quarter (QoQ) and 7% year-on-year (YoY) growth in gross revenue. Direct revenue grew 3.2% QoQ and 7.9% YoY. Net profit of the company stood at ₹423.3 crore, showing a growth of 4.7% QoQ and 8% YoY. Along with this, earnings per share (EPS) reached ₹22.4, showing a growth of 4.6% QoQ and 7.7% YoY. During the quarter, the company secured new contracts worth $207 million, of which 88% are related to new-generation services. This performance reflects the growing demand and financial strength of the company.
The company's CEO Nitin Rakesh said, "We are using AI and digital tools in such a way that our clients are not only getting more accurate solutions but their costs are also reducing significantly. Our services are not only fast but are also giving them better results."
Strength of Emphasis
Mphasis is a global IT solutions company offering cutting-edge services such as application development, cloud and data centers. Head-quartered in Bengaluru, the company serves multiple sectors such as BFSI, healthcare, retail and manufacturing with a presence in 21 countries. With a market capitalization of ₹55,037.56 crore, Mphasis is among the leading companies in the BSE200 category in India. The company is known for its technical expertise and providing superior solutions to industries.
By the time the market closed today, the stock of Mphasis was trading at ₹ 2,890 with a gain of 0.72%. At the same time, the BSE Sensex was at 77,964.99 with a decline of 1.59%.
What makes Mphasis special?
Mphasis has recorded excellent revenue and profit growth with strong financial performance. The company is leading its sector by increasing demand in the BFSI and mortgage segments and securing new deals. Jefferies has expressed confidence in Mphasis and estimated 20% growth with a target price of ₹ 3,460. Considering all these aspects, this strong performance of Mphasis is making it an excellent option for investors.
