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Informist, Saturday, Oct. 25, 2025

 

By Shakshi Jain

 

MUMBAI – Mid-cap information technology company Mphasis Ltd. is expected to report steady sequential top line and bottom line growth for the September quarter, led by a ramp-up of deals in the core banking and financial services segment and the second-biggest vertical technology, media and telecom. However, the company's operating margin for the reporting quarter is likely to fall marginally on a sequential basis due to the upfront transition costs associated with large deals.

 

The company's consolidated bottom line for the reporting quarter is expected to rise nearly 5% sequentially to INR 4.63 billion, according to the average of estimates from 15 brokerages. On a year-on-year basis, the profit after tax is expected to grow just over 9%. The highest estimate for net profit is INR 4.83 billion by Elara Securities (India) Pvt. Ltd. and the lowest is INR 4.46 billion by HSBC Global Investment Research.

 

The company's top line for the September quarter is seen rising almost 4% sequentially and 10% on year to INR 38.77 billion. The highest estimate for revenue is INR 39.42 billion from Nirmal Bang Equities Pvt. Ltd. and the lowest is INR 38.47 billion from Elara Securities. 

 

Nirmal Bang credited the company's strong order book and healthy conversion of deals to revenue for the expected top line growth for the September quarter. Besides the top two verticals of the company, analysts have a positive view on growth of the hi-tech segment for the reporting quarter. On the other hand, the overall growth in revenue is expected to be partially offset by a weak logistics and transportation vertical, according to analysts.

 

"Mphasis is geared more to US banks than to retail/manufacturing (sectors) and should be impacted less by recent tariff announcement. A revival in banking spends and the mortgage market in the US is a possible catalyst and could disproportionately benefit Mphasis," HSBC Global Investment Research said in a report.

 

In dollar terms, the company's revenue for the September quarter is expected to add up to $440.62 million, as per the average of estimates from 14 brokerages. The estimates vary and are in a narrow range – the lowest is $400 million by Indsec Securities and Finance Ltd. and the highest $446 million by Nirmal Bang. For the June quarter, the company had reported gross revenues of $437 million.

 

In constant currency terms, analysts see the company reporting anywhere between 1.0% to 1.8% sequential growth in revenue for the reporting quarter.

 

Several brokerages expect Mphasis' deal wins to moderate towards the $400-million mark after recording the highest-ever total contract value of $760 million in the June quarter. However, HSBC Global Investment Research said the company's deal wins have become broad-based, providing more comfort for double-digit revenue growth in FY27.

 

The company's earnings before interest and tax, or EBIT, margin for the September quarter is expected to decline marginally on quarter to 15.06%, according to the average of estimates from 12 brokerages. This is largely due to the ramp-up costs associated with large deals and ongoing investments, according to analysts.

 

Mphasis is targeting an operating margin of 14.75-15.75% for FY26. In the June quarter, the company's operating margin was 15.3%.

 

Motilal Oswal expects the company's utilisation rate for the September quarter to remain steady and no material change in amortisation and in the selling, general, and administrative expenses to sales ratio.

 

Mphasis had reported a consolidated net profit of INR 4.42 billion for the June quarter on revenue of INR 37.32 billion. In the September quarter last year, the company's consolidated net profit was INR 4.23 billion and revenue was INR 35.36 billion.

 

Mphasis will announce its September quarter earnings Thursday. Investors will watch out for the management's commentary on the logistics business, generative artificial intelligence-related deals, volume recovery in the mortgage business, and deal pipeline conversion.

 

On Friday, shares of the company ended at INR 2,818.90 on the National Stock Exchange, up 0.7%. The stock is up over 7% since the company reported its results for the June quarter on Jul. 25. 

 

Of the 17 research recommendations on the stock available with Informist, 11 have a 'buy' rating on Mphasis, while five have a 'hold' rating and one has a 'sell' recommendation. The average target price of the 'buy' recommendations is INR 3,032 and that of the 'hold' calls is INR 2,990.

 

Following are the Jul-Sept earnings estimates for Mphasis from 15 brokerages in descending order of the estimate of net profit in INR million:

 

Broking firm	Net sales (INR mln)	Net profit (INR mln)	Revenue ($ mln)	?IT
Elara Securities (India) Pvt Ltd	38,466	4,832	443
Nomura Equity Research	38,631	4,823	443	15
Kotak Securities Ltd	38,978	4,727	445	15.2
Motilal Oswal Financial Services Ltd	38,795	4,717	446	15.3
JM Financial Institutional Securities Pvt Ltd	38,680	4,646	445	15
ICICI Securities Ltd	39,172	4,639	400	15
Equirus Securities Pvt Ltd	38,841	4,636	446	15.1
Nirmal Bang Equities Pvt Ltd	39,415	4,603	443	15.4
Prabhudas Lilladher Pvt Ltd	38,500	4,600		15
Anand Rathi Share and Stock Brokers Ltd	38,491	4,572	441
Nuvama Wealth Management Ltd	38,555	4,571.10	442.7	15
HDFC Securities Ltd	38,870	4,540	443	15
Emkay Global Financial Services Ltd	38,875	4,522	442
Indsec Securities and Finance Ltd	38,700	4,500	443	14.6
HSBC Global Research	38,613	4,455	446	15.1
Average	38,772.13	4,625.54	440.62	15.06

 

End

 

US$1 = INR 87.85

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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