The brokerage said Mphasis is “positioning for a breakout.” Micro factors appear to be aligning for the company, and any macro support from interest rate cuts could provide additional tailwinds to growth.
It added that “chasing growth within FCF margin guardrails creates re-rating potential,” while naming Mphasis as its preferred mid-cap play.Morgan Stanley highlighted five catalysts for a potential re-rating:
– Consistent pipeline growth.
– Larger quarterly deal wins, rising from the current run-rate of $300-400 million, particularly outside the BFSI vertical, and better conversion of deal wins into revenue.- Greater revenue diversification beyond the top 10 clients and BFSI, with opportunities in healthcare.
– Potential rate cuts, which could lift digital risk (DR) revenue.
– A possible exit by the majority stakeholder over the next 2–3 years.
The brokerage also raised its revenue growth estimates for Mphasis, by 50 basis points for FY27 and 100 basis points for FY28.
Morgan Stanley believes improving growth trends create re-rating potential and expects the stock to narrow its valuation gap with mid-cap peers as the revenue growth gap reduces.
It further said investors should “double down on the potential promoter stake sale rather than wait for it as an entry point.”
Shares of Mphasis are trading 1.96% higher on Monday at ₹2,842.70. The stock has gained 3% in the last one month and is flat on a year-to-date basis.
First Published: Sept 1, 2025 9:25 AM IS
