HDFC Securities is bullish on Mphasis has recommended buy rating on the stock with a target price of Rs 1300 in its research report dated 08 Aug 2018.
HDFC Securities' research report on Mphasis
Mphasis posted a strong quarter (largely in-line with est) with revenue at USD 269mn, 1.7/16.4% QoQ/YoY (2.9/16.2% in CC terms). Direct Core (53.9% of rev) and HP/DXC channel (27.4% of rev) led the growth at 4.2% QoQ and 4.5% QoQ in CC terms, respectively. EBIT% came at 16.6%, -16bps QoQ (15.8% est) supported by 87bps QoQ gross margin increase (increase in FP-contract, automation). APAT stood at Rs 2.58bn supported by lower ETR.
Outlook
Factored USD rev growth at 10.1/12.3% and EBIT% at 16.7/17.9% for FY19/20E, respectively. Direct core growth est. at 3.0/3.2% CQGR and DXC growth at 2.8/2.9% CQGR for FY19-20E. Maintain BUY with TP of Rs 1,300, 20x FY20E-EPS supported by 19% EPS CAGR over FY18-20E and strong payout.
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