Dolat Capital recommended accumulate rating on Mphasis with a target price of Rs 1180 in its research report dated July 24, 2020.
Dolat Capital's research report on Mphasis
Results were inline with decline in revenues by about 4% QoQ in CC terms. OPM declined marginally given savings on sub-con costs (sustainable). PAT stood at Rs2.75bn inline (DE Rs2.74bn). Added new TCV of about US$259mn in Q1 (best ever); taking the growth in order wins to 30% on TTM basis. Also, added a large deal win of about US$216mn it signed in Jul'20 with tenure of three years. Company expect that the growth in Direct International will be led by robust TCV which should sustain given its good track record on deal wins (new logos) as well as improved mining, this along-with reducing exposure in DXC would ensure sustained financial outperformance.
Outlook
Improved growth would potential drive profitability up (guided OPM of 15.5%-16.5% for FY21) and strong payouts (yield of 4%). We assign Accumulate rating with TP of Rs 1180 valued at 16x FY22E earnings.
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