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Informist, Friday, Oct. 31, 2025

By Shakshi Jain and Anshul Choudhury

MUMBAI – Mid-cap information technology company Mphasis Ltd. expects a "sharp uptick" in the margins of its logistics and transportation vertical from the current quarter, a top company official said in a post-earnings conference call with analysts on Friday.

In the September quarter, revenue from this vertical declined 2.7% sequentially and 55% on year in constant currency terms. In rupee terms, the vertical accounted for 6% of the company's overall top line for the quarter at INR 2.18 billion.

"There was a specific investment we had made with respect to this vertical, which has contributed to the swing in the gross margin that you've seen in Q2 (Jul-Sept). I think you will see a complete return to normalcy on margins from Q3 (Oct-Dec) onwards. You will see a sharp uptick, because this is more of a one-time in nature...you will see a pickup in revenue, and that is from new deals that we are winning," the company official said.  

Overall, Mphasis' consolidated net profit for the September quarter rose over 6% sequentially to INR 4.69 billion and its revenue rose 4.5% sequentially to just over INR 39 billion. Compared to a year ago, the company's revenue was up 10% and the net profit rose nearly 11%.

According to the company's management, deal-to-revenue conversion during the September quarter was steady. However, there is further room for improvement in the pace of this conversion owing to the "transformation nature" of some of the deals. The company is broadly on track for conversion of deals signed in the June quarter as well as the September quarter.

On the company's core banking and financial services segment, the management said it expects growth in the vertical in the second half of the ongoing financial year. The segment recorded a marginal decline in constant currency revenue on a sequential basis in the September quarter.

"...the demand environment for banking, especially around adoption of AI (artificial intelligence) and new spends, being diverted to it seems to be the narrative that we are also continuing to see play out," the management said. Regarding worries tied to contraction in technology spending by regional banks in the US, after two lenders recently revealed they had been hit by bad or fraudulent loans, the management said Mphasis was confident this would not be a concern for the company given its portfolio.  

In the company's mortgage solutions business, the management said it is difficult to estimate a meaningful pick-up in volumes despite the moderation in interest rates. "...in expectation of volumes going up, we've seen some clients reach out proactively and asked us to create capacity. But it's difficult to say whether it will pick up in December or February, or how the seasonality will play out from a uncertainty standpoint because now, the December cut (interest rate) is under question, given the lack of data, given the (US) government shutdown."

According to the company's management, the mortage solutions business saw healthy sequential growth in the September quarter, driven by new deal wins. Mphasis expects to maintain wallet share gains and stay competitive in the segment in the base case scenario.

Regarding the overall demand environment, the management said clients wanted to move spending to new technology areas, while continuing to find efficiency in the way they run their operations. "Efficiency and saving is very much a theme that is driving a lot of conversation, but it's not in isolation of the transformation need."

The company's management said large deals would continue to remain "lumpy" in nature. Mphasis recorded new deals worth $528 million in the September quarter. 

When asked about furloughs in the ongoing quarter, the management said it was too early to say if it would be the same as last year. Mphasis is running a rolling 90-day forecast to manage its manpower requirements. "...instead of trying to run our supply chain with the old-school mode of onboarding a certain number of people, keeping them on the bench, and then consuming the bench, we are being a little bit more dynamic," the management said.

At 1215 IST, shares of the company were down 4.3% on the National Stock Exchange at INR 2,770.80.  End

US$1 = INR 88.73

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

Edited by Avishek Dutta

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