01-01-1970 12:00 AM | Source: Yes Securities Ltd
Add Mphasis Ltd For Target Rs.3,448 - Yes Securities
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Robust performance in the Direct segment

Our view

Overall, the revenue growth was above expectation, while the EBITDA margin was broadly inline. Now, the Direct segment has been powering the growth of the company, while DXC segment revenue has become insignificant and expected to stabilize at mid single digit of revenue contribution. Deal booking remains robust which provides strong revenue growth visibility. We maintain ADD Rating on the stock with revised target price of Rs 3,448/share

 

Result Highlights

* Reported revenue of Rs 31.2bn( up 8.9% QoQ in INR terms, up 7.6% QoQ in USD terms). The revenue growth was led by Direct revenue which grew by 10% QoQ in INR terms.

* DXC revenue declined by 9.5% QoQ in INR terms and contributed just 5% of revenue in Q3FY22 terms. The sequential revenue growth was led by strong performance in TMT and BFSI verticals

* EBITDA margin increased by 36 bps QoQ to 17.7%. While EBIT margin was flat QoQ at 15.1%.

* Deal booking remained strong at net TCV wins of $335 mn.  

* Cash and equivalent decreased by Rs 8.7bn QoQ during the quarter to Rs 24.4 bn

* Offshore revenue mix declined by 100 bps QoQ to 41%. Revenue by fixed price projects increased by 300 bps QoQ to 29%

* Added around 2,650 employees in the quarter to reach 34,915 employees as of 31st Dec, 2022

 

Valuation

The stock trades at PER of 28.1x on FY24E EPS. Robust deal booking provides strong visibility about revenue outlook over medium term. However, it faces potential margin headwinds such as travel expenses coming back and high attrition. We value the stock at 32x on FY24E earnings, arriving at target price of Rs 3,448/share

 

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