Mphasis (MPHL IN) – Q2FY26 Result Update – Stable quarter with strong deal wins, valuations capped – Accumulate
Published on 31 Oct 2025
The revenue growth performance (+2.0% QoQ CC) was above our estimates (+1.2% QoQ CC), attributed to continued momentum within TMT and Insurance vertical. Slightly disappointed with BFS muted growth, which again derived over Q1 high base, partly attributed to softness in its top account (down 6% TTM), but grew sequentially. The performance beyond BFS was notable and even the deal pipeline is fairly diversified to other verticals, which reduces dependencies over banking-heavy top accounts. The new deal TCV at USD 528m (up 155% YoY) translates to USD2bn TTM deal TCV, while BFS and non-BFS pipeline was up 45% YoY and 139% YoY. We believe the company’s strong participation in AI-led transformation (69% AI-led deal pipeline), early investments in AI-led solutions, and equal play in the optimization/innovation areas, help it construct better value proposition and win large strategic deals. The consistent increase in large deal pipeline (180% YoY) and steady conversion rate (TCV to Revenue), which is missing in many of its peers, gives us confidence to stay positive on Mphasis. We are baking revenue growth of 6.5%/8.1% YoY CC with EBIT margin of 15.5%/15.7% for FY26E/FY27E. We roll forward to Sep’27 EPS and assign 25x PE, translates a TP of 2,950. Maintain ACCUMULATE.
