Should you buy, sell or hold Mphasis shares after IT solutions firms Q2 results?

Mphasis shares suffered sharp losses on Friday after the Bengaluru-based IT solutions provider staged a mixed performance for the July-September period. The Mphasis stock fell by as much as Rs 123.1, or 5.5 per cent, to Rs 2,135 apiece on BSE.

The scrip closed with a cut of 4.2 per cent at Rs 2,164.5 apiece.

Mphasis Q2 results: Key highlights

Before market hours on Thursday, Mphasis reported a sequential decline of 1.0 per cent in consolidated net profit to Rs 392 crore. 

The company's revenue grew 0.8 per cent to Rs 3,277 crore, or 0.1 per cent to $398.4 million, for the quarter ended September 30, according to a regulatory filing. 

Direct revenue grew 0.3 per cent sequentially in constant currency, Mphasis said. 

Mphasis registered a margin of 15.5 per cent for the fiscal second quarter, up by 20 bps on a quarter-on-quarter basis. 

According to Zee Business research, Mphasis was estimated to log a quarterly net profit of Rs 405 crore, revenue of Rs 3,277 crore, and a margin of 15.3 per cent. 

"We are seeing signs of bottoming out, thanks to stability in mortgage and visibility to growth given the sustained pipeline expansion and contract closures that are starting to gain momentum. We are focused on establishing a path of AI acceleration with our full-fledged Mphasis.ai business unit, with key GTM along with solutioning AI partnerships to make the most of this opportunity," said Nitin Rakesh, CEO and Managing Director, Mphasis.

EDITOR'S TAKE | Mphasis Q2 earnings a mixed bag

Zee Business Managing Editor Anil Singhvi pointed out that while the company's margin was slightly better than estimates, its revenue as well as profit missed market expectations. 

Mphasis deal wins

Mphasis reported deal wins worth a total contract value (TCV) of $255 million in the quarter under review.

One of the largest banks in America is expanding its mortgage servicing partnership with Mphasis in end-to-end first mortgage, the Bengaluru-based company said. 

"An American hi-tech manufacturer is engaging Mphasis to provide managed capacity services at its offshore development center, for various initiatives including software product development, Mobile application development including AI enabling of devices," it added. 

Mphasis shares: Past performance

The Mphasis stock grew 25.4 per cent in the September quarter, sharply outperforming a 2.4 per cent rise in the headline Nifty50 index.  

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