Informist, Friday, Jul. 25, 2025

By Anjana Therese Antony

MUMBAI – Mphasis Ltd. posted muted financials for the June quarter and also failed to meet the Street's expectations on key earnings metrics. Its bottom line fell sequentially for the first time in six quarters while the slight rise in revenue was the slowest in four quarters.

The Bengaluru-based company's consolidated net profit fell over 1% sequentially to INR 4.42 billion, lower than the INR 4.59 billion expected by analysts. Its revenue rose 0.6% on quarter to INR 37.32 billion, but also missed the estimate of INR 37.57 billion. Compared to the year-ago period, both bottom line and top line rose more than 9%.

The company's gross revenue in constant currency was up 1% quarter on quarter, as against the sequential decline posted by most large-cap companies for the June quarter and largely in line with analysts' estimates. Also, its direct revenue in constant currency terms grew 1.6% on quarter. The company's operating margin was unchanged at 15.3% compared to the previous quarter.

The company's revenue from core banking and financial services segment grew nearly 6% on quarter to INR 19.68 billion and the second-biggest vertical--technology, media, and telecom--rose 2% to INR 6.76 billion. Revenue from insurance business grew 20% on quarter to INR 5.11 billion.

The BFS segment accounts for nearly 53% of the company's overall revenue and the second largest vertical contributes to 18% of the top line. "Mphasis stands out as a key beneficiary of the BFSI (banking, financial services and insurance) recovery, supported by rising tech demand from large US banks and consistent momentum in banking and capital markets across global IT peers," Anand Rathi Share and Stock Brokers had said in its pre-earnings report.

On the other hand, revenue from the logistics and transportation vertical, which accounts for just 6% of the overall top line, nearly halved from the previous quarter to INR 2.17 billion. A year ago, this was the third-biggest segment of the company.

The order pipeline in the BFS segment grew 47% on year and that in the non-BFS operations rose 108%. The company said it won total new contracts worth $760 million during the quarter, much higher than the $400 million-$600 million broking firms had estimated.

The company's post-earnings call with analysts was scheduled at 0830 IST. Investors will closely watch for the management's comments on business with its third-largest client, FedEx Corp., particularly as media reports said the company lost its business with this client. Comments about order booking, deal pipeline, pace of deal closures, and various business verticals will also be closely monitored.

The company announced its quarterly results after market hours Thursday. Its shares closed 3% lower at INR 2,653.50 on the National Stock Exchange. Of the 17 research reports available on Mphasis with Informist, 10 have a 'buy' or equivalent rating on the stock with an average target price of INR 3,055, which is 15% higher than the current market price. Five brokerages have a 'hold' or equivalent rating and the remaining two have a 'sell' or equivalent view. End

US$1 = INR 86.40

Edited by Ashish Shirke

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