Earnings Outlook
Mphasis PAT seen up 11% QoQ on deal ramp ups
This story was originally published at 20:01 IST on 23 July 2024
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By Noel John
MUMBAI – Mphasis Ltd is likely to report a healthy sequential growth in consolidated net profit for the June quarter on ramp-up in short-cycle deals and stability in top-10 clients. Further, growth in technology, media, and telecom and other verticals will help offset weakness in banking, financial services, and insurance.
Mphasis is reducing its dependence on the banking, financial services, and insurance vertical and is trying to become more diversified across verticals, Anand Rathi Shares and Stock Brokers wrote in its pre-earnings report. BFSI contributes the most to the company's topline.
The Bengaluru-based company will likely report a 11.4% sequential growth in consolidated net profit to 4.38 bln rupees and net sales are seen 1.5% higher sequentially at 34.65 bln rupees, according to an average of estimates of eight brokerage firms. Analysts' estimates for the net profit ranged from 3.97 bln rupees to 6.41 bln rupees and those for net sales from 34.39 bln rupees to 35.10 bln rupees.
On a year-on-year basis, the net profit is expected to rise 10.6% and the revenue is seen rising 6.5%. The company is scheduled to announce its Apr-Jun earnings on Thursday.
The estimates from seven brokerage firms project Mphasis' earnings before interest and tax margin at 15.14%. Analysts' estimates for EBIT margin ranged from 14.70-15.40%. In Jan-Mar the company's EBIT margin was 15.7%.
Analysts see the margin stable given the revenue softness and capability investments. According to Indsec Research, synergies from the Silverline acquisition and cost optimisation efforts will drive its margins in the June quarter.
The company's new deal wins would be in the $300 mln-$350 mln range, an improvement from the previous three quarters, according to Kotak Institutional Equities. Nirmal Bang Institutional Equities also expects the company's total contract value to cross the $300 mln mark, which it couldn't in the last three quarters.
According to brokerages, the company's comments on deal wins, top 10 clients, attrition, growth in BFSI vertical and an update on the integration of Silverline will be some of the key announcements to watch out for. Investors will also watch out for the company's outlook on digital risk and margins.
Following are the Apr-Jun earnings estimates for Mphasis, in mln rupees, based on reports from eight brokerages:
| Brokerage Name | Net Sales (mln rupees) | Net Profit (mln rupees) | EBIT Margin
|
|---|---|---|---|
| Anand Rathi Share and Stock Brokers Ltd | 34,579.00 | 4,090.00 | 15.40 |
| Incred Research Services Pvt Ltd | 34,568.00 | 4,074.00 | 15.00 |
| Indsec Securities and Finance Ltd | 35,100.00 | 4,200.00 | 15.40 |
| Kotak Institutional Equities | 34,389.00 | 4,009.00 | 15.00 |
| Motilal Oswal Financial Services Ltd | 34,653.00 | 4,252.00 | 15.30 |
| Nirmal Bang Equities Pvt Ltd | 34,851.00 | 4,040.00 | 15.20 |
| Nuvama Wealth Management Ltd | 34,397.00 | 6,406.00 | ----- |
| PhillipCapital (India) Pvt Ltd | 34,639.00 | 3,968.00 | 14.70 |
| Average | 34,647.00 | 4,379.88 | 15.14 |
End
Edited by Ashish Shirke
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