Mphasis (MPHL IN) – Q1FY27 Result Update – Resilient performance, aided by investments – BUY
Published on 24 Jul 2026
Management expects Q2FY27 to deliver the strongest sequential CC growth in the last 3 years, (implying growth of 2.9%+ QoQ CC), supported by continued large-deal ramp-ups and the expected contribution from the Red Oak contract acquisition. Management also view targeted customer contract acquisitions as a scalable, low-risk inorganic element to stimulate organic growth. EBIT margin declined 60bps QoQ to 14.8%, below our estimate of 15.3%, primarily due to large deal ramp-up costs, ~35bps of acquisition-related expenses (one-off) and lower utilization (down 300 bps QoQ). While management reiterated its FY27 EBIT margin guidance of 14.75–15.75%, aided by improving utilization and normalization of deal ramp-up & acquisition-related costs over the remainder of the year. We maintain our FY27E/FY28E revenue growth estimates of 9.0%/10.7% YoY CC aided by Q2 outlook and robust deal conversion drive our confidence. However, we reduce our FY27E/FY28E EBIT margin estimates by 10bps each to 15.3%/15.4%, resulting in a 2.9%/1.4% cut to our FY27E/FY28E EPS estimates. We also lower our target multiple to 22x FY28E EPS (23x earlier) to arrive at revised TP of INR 2,820. Retain BUY.
