MOSL: MPHASIS (Neutral)-Revenue growth steady-Profitability beat led by SGA leverage
Mphasis: Revenue growth steady; Profitability beat led by SGA leverage
(MPHL IN, Mkt Cap USD2.5b, CMP INR952, TP INR1070, 12% Upside, Neutral)
- 4QFY19 Gross margin below estimate: For FY19, revenue grew 13% YoY, EBITDA was up 25% YoY and PAT increased 26% YoY. Total payout for the year, including buyback, stood at 141%. 4QFY19 USD revenue grew 10% YoY (our estimate: +11% YoY) to USD292m, EBITDA increased 10% YoY (our estimate: +8% YoY) to INR3404m, and PAT was up 6% YoY (our estimate: - 1% YoY) to INR2,662m. EBITDA margin was flat during the quarter at 16.8%, above our estimate of 16.4%, primary due to a 120bp dip in SGA. Gross margin shrank 90bp in the quarter, 120bp miss.
- HP/DXC channel drove growth in FY19: MPHL’s FY19 revenues from HP/DXC channel grew 23% YoY, the key driver of growth. Direct International channel revenues grew 11% YoY in constant currency, of which Direct Core grew 16% YoY in constant currency. Overall Direct International revenues were impacted by decline in Digital Risk.
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.
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