Why is Mphasis share price falling?
Shares of Mphasis have fallen 4 per cent in the last five days. The stock is also down 40 per cent in 2022.
Why, you might wonder?
The stock has been under pressure for some time now because Widespread fall in IT stocks, The Russo-Ukraine war put pressure on global markets. This fall in global markets also led to a fall in Indian IT stocks.
However, the company’s shares have declined recently after reporting lower than expected results for the September 2022 quarter.
how’s that?
let’s find out…
Silent Quarterly Results
Mphasis reported 16.8 percent year-on-year revenue growth in constant currency terms, which was below analysts’ expectations. The revenue default was due to an unexpected holiday in a specific customer.
However, the effect in rupee terms got adjusted on account of depreciation in Indian rupee in respect of US dollar. In rupee terms, it registered a revenue growth of 27 per cent year-on-year.
The company’s growth witnessed an unfavorable mortgage LOB impact from macro factors (yield volatility), impacting the BFS vertical, while the insurance business saw a gradual decline.
The company’s operating profit grew by 24.1 per cent year-on-year, driven by growth in revenue. But operating profit margin remained stable at 17.5 per cent due to increase in expenses.
Management has reiterated its operating profit guidance band of 15.25-17 per cent for the remaining fiscal year 2023.
Overall, the company posted a net profit growth of 22.5 per cent year-on-year. Net profit margin came in flat at 11.9 per cent.
management note
In the latest conference call, the company’s management mentioned that it sees strength not only in deal closures but also in genesis.
Mphasis signed contracts worth $302 million, bringing the total contractual value to $1.3 billion, with two major deals worth a cumulative $110 million.
It shared that 3 out of 5 NCA (New Customer Acquisition) verticals have achieved a $100 million run rate over the past 3 years, and contribute 25 percent to direct revenue, reflecting customer acquisition success.
For verticals such as insurance, the company will work on creating a few anchor clients within each subdivision, such as brokerage, and life, to drive growth potential.
Mphasis said two-thirds of its customers believe that IT services spending could increase in 2023 despite macro headwinds.
Changing deal models could impact outsourcing spend, it said, adding that 65 percent of customers believe vendor consolidation is a high priority.
How Mphasis Shares Have Performed Lately
Shares of Mphasis have fallen 4 per cent in the last five days. The stock is also down 40 per cent in 2022 due to pressure in global markets.
In 2022, Indian IT Stocks A sharp recovery was experienced, partly due to concerns about a prolonged slowdown in US IT spending.
May 2022 proved to be a bad month especially for IT stocks. A growing movement of economists has already predicted a global recession within the next 12 months. The Indian market is unlikely to survive these adverse conditions.
The share of Mphasis touched a 52-week high of Rs 3,495 on 16 November 2021 and a 52-week low of Rs 1,983 on 26 September 2022.
At current prices, Mphasis is trading at a PE multiple of 29.6 and a price to book value multiple of 9.2.
mphasis share price in 2022
about emphasis
Mphasis is a global information technology services company specializing in infrastructure outsourcing services and business process outsourcing (BPO) solutions as well as application development and maintenance services.
The company’s major servicing areas include BFSI, Technology & Media, and Logistics & Transportation.
It was once a subsidiary of Hewlett Packard Enterprise. However, 56 per cent of the company is now held by global private equity major Blackstone Plc.
Disclaimer: This article is for informational purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated from equitymaster.com,
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)
