Mphasis Q1 Results: Strong deal wins, pipeline may offset revenue growth miss

Shares of Mphasis Ltd. gained on Friday, July 25, after the company reported its first quarter earnings after market hours on Thursday.Revenue growth of 1% for the quarter, on a sequential and constant currency basis, was lower than the expectations of a 1.5% growth.
The company’s earnings before interest and taxes (EBIT) margin remained unchanged from the March quarter, at 15.3%.
Mphasis reported a profit after tax of ₹441.7 crore in the June quarter, compared to ₹446.5 crore in the previous quarter and ₹404.5 crore in the same period last year.Its rupee revenue came in at ₹3,732.4 crore in the June quarter in comparison to ₹3,710 in the fourth quarter of FY25 and ₹3,422.5 crore in the first quarter of last fiscal.

Order pipeline

Mphasis reported its largest-ever total contract value (TCV) wins at $760 million in the first quarter compared to a four-quarter average of $320 million. This is its largest ever order-pipeline, 68% of which is AI-driven.It won four large deals in the June quarter, including three $100 million contracts and one worth $50 million. Its banking and financial services (BFS) orders increased 47% compared to the previous year, while non-BFS orders were up 108%.

Its large deals pipeline was up 40% sequentially and 154% from the June quarter of the previous fiscal.

Logistics and Transportation revenue declines

Mphasis’ logistics and transportation revenue declined 46.2% sequentially. It was impacted by customer-specific investment. However, the company said significant new deals are in the pipeline in this vertical.Growth was led by insurance, as it grew by 20.4% from the previous quarter. Meanwhile, BFS and technology media and telecom (TMT) grew 6.7% and 2.5%, respectively, from the last quarter.

Guidance

Mphais expects to grow at double the industry pace, on the back of its first quarter performance and steady conversion of TCV to revenue.

The company reported a steady ramp-up of large deals in the ongoing quarters. Its target operating (EBIT) margin is within the 14.75%-15.75% band.

Mphasis’ top 1-10 clients grew 7.6% in the last 12 months, while top 11-30 grew 7.4%.

Mphasis shares were up 3.38% at ₹2,743.1 apiece around 9.20 am on Friday, July 25.

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