Mphasis, an Indian IT services firm backed by Blackstone, anticipates that its financial segment will be a key driver of sales growth in the six months leading up to the end of March. The company projects revenue growth of more than twice the industry average, according to its CEO.
The mid-cap IT company is expected to report steady sequential top line and bottom line growth for the September quarter, driven by a ramp-up of deals in the core banking and financial services segment and the technology, media and telecom sectors. However, the company's operating margin for the reporting quarter is likely to fall marginally on a sequential basis due to the upfront transition costs associated with large deals.
Mphasis is strategically focused on banking, particularly in the US, which could disproportionately benefit the company. HSBC Global Investment Research noted that a revival in banking spends and the mortgage market in the US could act as a catalyst for Mphasis.
In the July-September quarter, Mphasis reported a 10.79% increase in net profit to ₹469 crore, with revenue rising 10.34% to ₹3,901.91 crore. The company's CEO highlighted strong total contract value wins of USD 528 million, driven by early investments in AI and a focus on new-gen services.
Nitin Rakesh, Chief Executive Officer and Managing Director, stated that Mphasis is focused on continued investments in growth, keeping tech and AI at the core, and leveraging solutions to transform and modernize its clients' technology and operations stack.
Mphasis reported a net profit increase of 13.6% to ₹446.5 crore in the January-March quarter of FY25, driven by higher margins and increased revenue from the BFSI segment. Consolidated revenue from operations grew by 8.7% to ₹3,710 crore during the reported quarter from ₹3,412 crore in March 2024 quarter. The operating margins of the company stood at 15.3% during the fourth quarter as well as in the year ended March 2025.
Mphasis is targeting an operating margin of 14.75-15.75% for FY26. In the June quarter, the company's operating margin was 15.3%. For the September quarter, Motilal Oswal expects the company's utilisation rate to remain steady with no material change in amortisation and in the selling, general, and administrative expenses to sales ratio. Mphasis had reported a consolidated net profit of ₹4.42 billion for the June quarter on revenue of ₹37.32 billion. In the September quarter last year, the company's consolidated net profit was ₹4.23 billion and revenue was ₹35.36 billion.
Revenue from new clients is increasing rapidly, up by 39% in FY23, accounting for 22% of total revenue. In the final quarter of FY23, Mphasis recorded net new deals with a total contract value of $309 million, including a significant deal worth $150 million from a new client. The company maintains a consistent run rate of $300 million or more in TCV wins per quarter, with net new TCV in FY23 at $1.3 billion. In FY23, the average size of a large deal was $61 million, a two-fold increase from the previous three years.
