MPHASIS - Mphasis

📊 NSE: MPHASIS 🏢 Computers - Software - Large 📅 Last Updated: 12/14/2025 10:02

💰 Financial Performance

Revenue Growth by Segment

Mphasis reported a revenue decline of 3.8% YoY in FY2024 to INR 13,278.5 Cr, primarily due to a slowdown in the mortgage and banking segments which account for over 50% of annual revenues. However, H1 FY2025 saw a recovery with 6.6% YoY growth driven by the banking and insurance verticals. The company achieved a record TCV of $1.3 billion in H1 FY2026, surpassing the total TCV of FY2025.

Geographic Revenue Split

The company exhibits high geographical concentration with the US market contributing 81% of total revenues in FY2024 (down slightly from 82% in FY2023). Other regions including Europe and India contribute the remaining 19%. This concentration makes earnings highly vulnerable to US-specific macroeconomic shifts and regulatory changes.

Profitability Margins

Operating margins remained healthy at 18.2% in FY2024, supported by cost optimization and easing wage inflation. The company targets a long-term operating EBIT margin band of 14.75% to 15.75%. Net margins are susceptible to pricing pressures in the intensely competitive IT services industry and fluctuations in the mortgage segment.

EBITDA Margin

EBITDA margins have remained relatively stable despite revenue volatility. In FY2022, the company maintained robust debt protection with an interest coverage ratio of 28.5x and TD/OPBITDA of 0.6x. Margin stability is supported by a shift toward high-value digital and AI-led services which now comprise one-third of the order book.

Capital Expenditure

While specific annual CAPEX figures are not fully detailed, the company maintains a strong liquidity position with cash and liquid investments of INR 2,982.6 Cr as of September 30, 2024, to fund ongoing digital transformations and potential acquisitions like Silverline.

Credit Rating & Borrowing

ICRA reaffirmed ratings at [ICRA]AA+ (Stable) and [ICRA]A1+. The company maintains a negative net debt position with a gearing of 0.2x as of March 2022, indicating very low reliance on external borrowing and high financial flexibility.

⚙️ Operational Drivers

Raw Materials

As an IT services firm, the primary 'raw material' is human capital (skilled workforce), which accounts for the largest portion of operating costs. Wage costs and talent acquisition expenses are the critical cost drivers.

Import Sources

Not applicable for IT services; however, talent is primarily sourced from India, the US, and Europe.

Key Suppliers

Not applicable in a traditional manufacturing sense; however, the company leverages the Blackstone Group's ecosystem for client acquisition and strategic partnerships with firms like Kore.ai.

Capacity Expansion

Capacity is measured by headcount and TCV wins. The company closed over $2 billion in TCV on a last 12-month basis as of Q2 FY2026, indicating a significant expansion in service delivery capacity.

Raw Material Costs

Employee benefit expenses and wage inflation are the primary cost factors. Attrition rates have moderated in FY2024, aligning with industry averages, which helps in stabilizing the cost-to-revenue ratio.

Manufacturing Efficiency

Efficiency is tracked through TCV-to-revenue conversion pace and utilization of the NeoIP suite of agents to automate service delivery.

Logistics & Distribution

Distribution is digital; costs are related to global delivery center maintenance and cloud infrastructure.

📈 Strategic Growth

Expected Growth Rate

12-15%

Growth Strategy

Growth is driven by an AI-first strategy, leveraging the NeoIP suite (NeoCrux, NeoZeta) and gaining access to the investment portfolios of Blackstone, ADIA, and UC Investments. The company aims for growth at >2x the industry average by converting its $1.3 billion H1 FY2026 TCV into revenue.

Products & Services

IT services, BPO services, Cloud transformation, AI-led solutions (NeoCrux, NeoZeta), and mortgage processing services.

Brand Portfolio

Mphasis, Silverline (Sonnick Partners LLC), NeoCrux, NeoZeta, NeoIP.

New Products/Services

Launched AI products NeoCrux and NeoZeta; AI-driven deals now represent approximately 33% of the total order book.

Market Expansion

Expanding footprint in the US and Europe through the acquisition of Silverline (Salesforce partner) and eBECS to deepen presence in cloud and digital segments.

Market Share & Ranking

Positioned as a leading mid-tier IT services player; serves 6 of the top global banks and 11 of the top 15 US mortgage lenders.

Strategic Alliances

Strategic alliance with Kore.ai for conversational AI and deep integration with Blackstone Group's portfolio companies for captive-to-direct business conversion.

🌍 External Factors

Industry Trends

The industry is shifting toward AI and cloud-based discretionary spending. Mphasis is positioning itself to capture this by ensuring 1/3 of its TCV is AI-led, moving away from traditional legacy maintenance.

Competitive Landscape

Faces intense competition from Tier-1 Indian IT firms (TCS, Infosys) and global consultants (Accenture), which limits its ability to hike prices significantly.

Competitive Moat

Moat is built on deep domain expertise in Banking and Capital Markets (BCM) and a unique 'Blackstone advantage' providing a steady pipeline of captive deals. This is sustainable due to long-term (10+ year) relationships with top-tier global banks.

Macro Economic Sensitivity

Highly sensitive to US GDP growth and interest rate cycles; a 1% change in US interest rates significantly impacts the mortgage servicing business volume.

Consumer Behavior

Clients are shifting from large multi-year legacy contracts to shorter, transformation-heavy AI and digital deals.

Geopolitical Risks

Exposure to US and European regulatory changes regarding data residency and H1-B visa policies which could increase operational costs.

⚖️ Regulatory & Governance

Industry Regulations

Subject to international data protection laws (GDPR) and US financial service regulations. Compliance is critical as a breach could lead to significant penalties and loss of marquee banking clients.

Environmental Compliance

Direct environmental risk is low due to the service nature of the business; ESG focus is primarily on data security and social governance.

Taxation Policy Impact

The company faces ongoing scrutiny regarding income tax-related matters, which are categorized as contingent liabilities.

Legal Contingencies

Sizeable contingent liabilities exist, primarily related to income tax matters. Materialization of these could impact the INR 2,982.6 Cr liquidity position.

⚠️ Risk Analysis

Key Uncertainties

US macroeconomic uncertainty and potential reduction in discretionary IT spend pose a 5-10% risk to revenue growth targets.

Geographic Concentration Risk

81% of revenue is derived from the US market, creating a high-risk profile for region-specific economic downturns.

Third Party Dependencies

High dependency on the Blackstone Group for deal flow; any change in Blackstone's stake or investment strategy could impact the 'Direct' business growth.