Mphasis Anticipates Banking Sector Growth and Improved Logistics Margins
Mphasis reported strong Q2 results with 5.3% QoQ revenue growth and 6.2% QoQ net profit increase. The company secured $528 million in new TCV, with 87% in new-gen services. Mphasis is focusing on AI-driven initiatives, launching Mphasis NeoIP™ and forming strategic partnerships. The company anticipates growth in the banking sector and expects improved logistics margins. Mphasis aims to maintain its target operating margin range of 14.75% to 15.75% while pursuing growth above twice the industry average.
*this image is generated using AI for illustrative purposes only.
Mphasis , a leading IT solutions provider specializing in cloud and cognitive services, has announced its strategic plans to leverage artificial intelligence (AI) for growth while maintaining a target operating margin range of 14.75% to 15.75%. The company also anticipates growth in the banking and financial services sector and expects improved logistics margins.
AI-Driven Strategy and Financial Performance
Mphasis reported strong financial results for the quarter ended September 30:
- Gross revenue grew 5.3% quarter-on-quarter (QoQ) and 11.4% year-on-year (YoY)
- Direct revenue increased 5.5% QoQ and 13.4% YoY
- Net profit rose 6.2% QoQ and 10.8% YoY to ₹4,691.00 million
- Earnings per share (EPS) grew 6.2% QoQ and 10.2% YoY to ₹24.70
The company's focus on AI-led initiatives has resulted in significant deal wins, with new Total Contract Value (TCV) of $528.00 million in Direct business, of which 87% is in new-gen services.
Strategic Partnerships and AI Integration
Nitin Rakesh, CEO and Managing Director of Mphasis, emphasized the company's early investments in AI, stating, "Our early, focused investments in AI have positioned Mphasis as a strategic partner for clients navigating their transformation journey. Another strong quarter of TCV wins of $528.00 million is a testimony to our AI first approach delivering business outcomes, across diverse industries."
Key partnerships highlighting Mphasis' AI-driven approach include:
- A major US-based airline selected Mphasis for managed cloud and applications services, leveraging AI for efficient AI Ops.
- A Hi-Tech device manufacturing giant partnered with Mphasis to transform its R&D Engineering Platform Support ecosystem using AI-driven automation.
- A leading US wireless telecommunications company chose Mphasis for transformational Salesforce development services.
Innovation and Industry Recognition
Mphasis continues to innovate in the AI space, recently launching Mphasis NeoIP™, a unified AI Platform with purpose-built agents. This platform orchestrates AI solutions to deliver impactful outcomes across the entire enterprise IT value chain.
The company's efforts in AI and digital transformation have been recognized by industry analysts:
- Featured in Forrester's The AI Consulting Services Landscape
- Recognized as a Major Contender in various Everest Group PEAK Matrix® Assessments, including Digital Workplace Services and Application Transformation Services for AI-enablement
- Positioned in Horizon 1 by HFS in HFS Horizons for Mortgage Reinvention and Cybersecurity Services
Future Outlook and Sector-Specific Expectations
Mphasis aims to achieve growth more than twice the industry average, citing strong performance in the first half of the fiscal year and successful conversion of TCV wins into revenue. The company plans to focus on:
- Pursuing, winning, and executing at the account level
- Expanding the Mphasis NeoIP™ suite of agents
- Converting pipeline to TCV and TCV to revenue
- Maintaining the target operating (EBIT) margin within the 14.75% - 15.75% range
In addition to these general strategies, Mphasis anticipates growth in the banking and financial services sector from October to March. The company sees increased demand for AI-driven contracts from the banking sector, aligning with its AI-focused approach.
Regarding logistics operations, Mphasis acknowledges that they were affected in July to September primarily due to investments. However, the company expects a significant increase in logistics operations margin from October to December.
It's worth noting that furloughs from October to March may differ from last year, indicating potential changes in workforce management strategies.
As Mphasis continues to position itself as an AI-led, platform-driven company, it remains committed to helping global enterprises modernize, infuse AI, and scale with agility in an increasingly dynamic AI-first world. The company's focus on the banking sector and anticipated improvements in logistics margins demonstrate its adaptability to market demands and operational efficiency efforts.
Historical Stock Returns for Mphasis
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -4.03% | -1.49% | +4.60% | +12.47% | -3.56% | +104.39% |
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