MOSL: MPHASIS (Neutral)-Incrementally positive HP channel outlook
​Mphasis: Incrementally positive HP channel outlook
(MPHL IN, Mkt Cap USD1.8b, CMP INR573, TP INR550, 5% Upside, Neutral)
- Digital Risk-led revenue miss: MPHL reported a 0.9% QoQ decline (est. of +1.1% QoQ) in revenue to USD222m. While the HP channel saw its third consecutive quarter of stable performance and Direct Core revenue grew 2.3% QoQ, performance was marred by ~10% QoQ decline in Digital.
- Outlook of revenue growth in HP channel: MPHL entered into a partnership with DXC Technologies for application modernization, extending the relationship with HP/DXC, driving the company’s outlook of revenue growth in the segment in FY18. Also, the company announced in-roads into the Blackstone portfolio of companies, winning its first deal in 4Q and another three post that. Direct Core should continue growing above industry average. However, overall revenue continues to be weighed upon by Digital Risk and Direct Emerging (17% of revenue).
- Margin stability: In 4Q, EBIT margin shrunk 10bp to 14.6%, despite pressure in Digital Risk. PAT at INR1.9b declined 5.4% QoQ. Hedge gains on the top line and lower amortization costs drove 180bp FY17 margin expansion. Also, current hedges provide visibility of higher gains in FY18 over FY17, assuming INR/USD at present levels.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.