Analyst Concall
Cautious on FY26 margin view, bulk deals need invest
This story was originally published at 10:05 IST on 25 April 2025
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--Mphasis: Focused more on converting deals into revenue
--Mphasis: FY26 growth seen better than FY25, uncertainty a challenge
--Mphasis: Cautious on margin guidance as large deals may need investment
--Mphasis: Strong deal pipeline for logistics, transportation, healthcare
--Mphasis: Weakness in logistics segment in Jan-Mar broad-based
--Mphasis: Continue to invest in AI despite macro challenges
--CONTEXT: Comments by Mphasis' management in post-earnings conference call
--Mphasis: Artificial intelligence driving large deal pipeline
By Narayana Krishna and Simran Rede
HYDERABAD/MUMBAI – Information technology and consulting services company Mphasis Ltd. on Friday said it is cautious on giving margin guidance for 2025-26 (Apr-Mar) as there is a need to increase investments in certain verticals to execute large deals.
Mphasis projected its FY26 earnings before interest and tax margins in the band of 14.75-15.75%.
In a post-earnings conference call to detail its Jan-Mar performance, Mphasis' management said that given the current deal pipeline, the company is confident of doing better in FY26 than in FY25. However, geopolitical tensions and global uncertainties were some of the challenges.
Though there are several levers to improve the margins, the company is aware of the investments that are required in areas such as artificial intelligence and other platforms to drive growth. Though the macro environment is challenging, it will continue to invest in AI-related projects, which would provide long-term growth. The company said large deals growth is driven by AI-based opportunities.
Mphasis' consolidated net profit rose over 4% sequentially to INR 4.46 billion and was slightly better than the Street's expectations of INR 4.38 billion. The company's revenue grew 4.2% sequentially in the March quarter to INR 37.10 billion, the fastest in 12 quarters on a consolidated basis and higher than the consensus estimate of INR 37.04 billion.
For FY25, the company reported a consolidated net profit of INR 17.02 billion compared to INR 15.55 billion a year ago. Its consolidated revenue for the same period was INR 142.30 billion, higher than the INR 132.79 billion a year ago.
Declining to provide any specific revenue growth guidance for FY26, Mphasis' management said while chasing the growth opportunities, the company is more focused on converting the large deals into revenue.
The company reported two large deals in Jan-Mar, taking the total number of large deals won in FY25 to 13.
The management said there was weakness in its logistics segment business as a significant number of clients pulled out of plans during Jan-Mar due to global uncertainties. However, the company said there is a strong deal pipeline in the logistics segment along with transportation and healthcare verticals, which may show results in coming quarters.
At 0954 IST, shares of Mphasis traded at INR 2,497.20 on the National Stock Exchange, up 1.2% from its previous close. End
US$1 = INR 85.20
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Tanima Banerjee
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