Anand Rathi issued a buy rating for Mphasis with a target price of Rs 3079. The company delivered strong Q2FY27 results, showing growth across key sectors like BFS and TMT. Management raised its FY27 revenue guidance to low double digits, as AI-led deals and a record pipeline support future growth momentum.
Anand Rathi's research report on Mphasis Mphasis delivered a strong Q2FY27, marking its best sequential cc growth in three years, supported by broad-based traction across BFS (53.3% of revenue, +4.4% q/q cc), Insurance (14.7%, +1.8%) and TMT (19.4%, +9.9%), alongside continued ramp-up of large deal wins. Revenue grew 3.3% q/q and 9.7% y/y in CC, with Direct business growing 3.5% q/q and 11.3% y/y CC. Growth is being supported by a favourable shift in deal composition, with shorter-cycle engagements improving revenue conversion. Net new TCV stood at $466mn (-11.7%), of which 66% (vs. 63% in Q1FY27) was AI-led.
Mphasis Tria is emerging as a differentiator in large deal evaluations, enabling the company to move beyond traditional IT budgets into business process transformation and outcome-linked engagements. However, monetisation remains at an early stage, with management indicating that FY27 will be a foundational year for Tria. Operating margin declined 40 q/q at 15.9%; higher onsite deployment requirements, acquisition-related amortisation and continued investments in AI capabilities and client coverage are weighing on near-term profitability. Cash conversion also remains a monitorable, with delayed collections and elevated receivable days affecting quarterly cash generation.
Reflecting strong H1 performance, record pipeline and improving deal conversion, management raised FY27 revenue growth guidance to low double digits from high single-digit to low double digits previously, signalling confidence in sustaining the growth momentum through H2. We remain constructive on Mphasis and retain a BUY rating. Outlook At CMP, Mphasis trades at 18.8x/16.9x FY28/29e P/E. We have revised our FY27/28/29e revenue ($) & EPS estimates by +1.0/+2.5/+3.1% & +1.7/+3.0/-2.1% with adj. FY27-29e EPS CAGR of 12.6%. We maintain BUY rating with a TP of Rs3,079, implying a ~22% upside.
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