Q3FY19 result highlights
Key positives: Growth in HP/DXC portfolio
Key negatives: De-growth in digital risk business.
Impact on financials: FY19E/FY20E/FY21E unchanged EPS.
Valuations & view
Mphasis’ deal wins has been steady in FY19 with seasonality impacting momentum in Q3FY19 (USD 122 mn vs. Q3FY18: USD 130mn). Management is focusing on increasing wallet share in existing accounts and leveraging Blackstone portfolio and expects the segment to grow ahead of industry. We expect revenue momentum to continue mid-teen growth under new management team. We have liked the micro growth story of Blackstone portfolio and HP/DXC; and strong deal flow gives us greater confidence. We maintain our outperformer rating with unchanged Dec-2019 target price of Rs.1400.
Mphasis Limited is a information technology solution provider in cloud and cognitive services. The Company's segments include Banking and Capital Market, Insurance, Information Technology, Communication and Entertainment and Emerging Industries. The geographical segments include United States of America, India, Asia Pacific and Europe, Middle East and Africa. It offers cloud computing, cognitive solutions, digital services, securing businesses, application services and infrastructure services. The Company serves various industries such as banking and capital market which includes, retail banking, credit cards and payments, wealth management and brokerage, corporate banking solutions and investment banking technology. Its insurance industry includes, property and casualty, life and retirement and health. Its other industries consist of communications, energy and utilities, healthcare, life science, logistics, manufacturing and travel and transportation.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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