IT services major Mphasis Ltd. has reaffirmed its high-single to low-double digit revenue growth guidance for fiscal year 2027 following its first-quarter (Q1 FY27) results. Despite some margin pressures, leading brokerages Nuvama Institutional Equities and Elara Capital have maintained their 'Buy' ratings on the company's shares, citing robust deal wins and a strong order book.
Q1 FY27 Performance Overview
For the June quarter (Q1 FY27), Mphasis reported a revenue of $471 million. This represents a 2.1 percent increase quarter-on-quarter (QoQ) and an 8.3 percent rise year-on-year (YoY) in constant currency terms, largely aligning with market estimates.
However, the company's EBIT (Earnings Before Interest and Taxes) margins came in at 14.8 percent, a 60 basis point decline QoQ, which was slightly below the estimated 15.1 percent. Total Contract Value (TCV) remained strong at $461 million, marking a 13 percent increase QoQ, though it was down 39 percent YoY.
Brokerage Perspectives and Target Prices
Nuvama Institutional Equities
Nuvama highlighted Mphasis' consistent track record of strong deal wins over the past five quarters, which underpins confidence in its future growth trajectory. The brokerage noted that the management's incremental Q2 guidance further supports this positive outlook.
"Mphasis has consistently reported strong deal-wins for the last five quarters, providing confidence on the growth momentum — reflected in the incremental Q2 guidance given by management too," Nuvama stated.
Nuvama has retained its 'Buy' rating on Mphasis shares and an unchanged 12-month target price of Rs 3,200, valuing the stock at 25x FY28E PE.
Elara Capital
Elara Capital acknowledged that while Mphasis' Q1 revenue performance met expectations, margins were lower than anticipated. The brokerage observed sequential moderation in the Banking & Financial Services (BFS) segment, yet it continued to exhibit strong higher single-digit growth on a YoY basis, driven by wallet share gains and new account expansion. Similarly, the Insurance business, despite sequential weakness, sustained robust mid-teen YoY growth.
Elara attributed some moderation in growth to the completion of certain projects following a period of strong performance. The brokerage also pointed to a significantly expanded pipeline, which has grown 2.8 times since Q2 FY24, coupled with a healthy order book exceeding $400 million for five consecutive quarters, with the last twelve months (LTM) order book now at $1.8 billion. This robust pipeline and order book provide strong revenue visibility.
Elara Capital maintained its 'Buy' call but adjusted its target price downwards to Rs 2,740 from Rs 2,845.
Stock Performance
Following the Q1 results and brokerage reports, Mphasis shares closed 1.88 percent higher at Rs 2,274.15 on Friday.