Analyst Concall
Jan-Mar sequential sales growth seen at 3-yr high - Mphasis
This story was originally published at 15:10 IST on 24 January 2025
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--Mphasis: Going forward, expect to maintain margins within 14.6-16%
--CONTEXT: Comments by Mphasis' management in post-earnings analyst call
--Mphasis: Expect to beat industry growth going forward
--Mphasis: Saw 2% impact of furloughs in Oct-Dec
--Mphasis: Expect sequential growth from insurance segment going ahead
--Mphasis CEO: Directionally, don't see major shift in utilisation ahead
By Arya S. Biju
MUMBAI - Mphasis Ltd. expects sequential revenue growth in the March quarter to be the highest in three years, Nitin Rakesh, chief executive officer and director of the company, said in a post-earnings analyst call. The technology services provider expects to grow faster than the industry during the year, gaining from improving conversions of total contract value to revenue and strong deal wins.
The company has seen broad-based order pipeline growth and large deal opportunities in the December quarter. It witnessed traction in artificial intelligence archetypes, including AI modernisation, continued high share of proactive deals, and improvement in total contract value across verticals, the management said. During the quarter, total contract value was $351 million and its won five large deals.
Mphasis maintains its stance on sustaining operating margin within the band of 14.6%-16.0%. Operating margin, calculated as earnings before interest and tax margin, in Oct-Dec contracted slightly to 15.3% from 15.4% in the previous quarter.
On segmental performance, the company said it expects sequential growth in the insurance vertical to continue, going forward. However, two other segments--banking and financial services, and technology, media and telecommunication--are expected to lead revenue growth, the management said. Revenue from the banking segment in constant currency terms grew 1.6% sequentially in the December quarter. Insurance segment's sales rose 4.4% sequentially, while the technology media and telecom segment reported sequential revenue growth of 3% in constant currency terms.
The technology services company had a furlough impact of 2% in the December quarter. The company said it expects to recover a healthy portion of it, but did not mention the timeline of recovery. It also does not expect any material extension of furloughs to Jan-Mar, as the current financial year is anticipated to be better than the previous two.
Directionally, the company does not see a major shift in utilisation from where it is currently. "I think it is safe to say that we will be around similar levels," Rakesh said.
The company released its Oct-Dec results after market hours Thursday. Its consolidated net profit for the December quarter grew 1% sequentially to INR 4.28 billion, beating analysts' expectation of INR 4.15 billion. Revenue grew marginally to INR 35.61 billion, marking the sixth consecutive quarter of revenue growth. At 1442 IST, its shares were up 3.4% at INR 3,019.80 on the National Stock Exchange Friday. End
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Edited by Vandana Hingorani
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