Motilal Oswal Initiates Coverage on Mphasis with a Buy Recommendation, Targeting Rs 3400

Mphasis Research Report

Key Highlights

• Management's key message is that the current AI debate is running ahead of business reality, with AI expected to change service delivery over time and create new opportunities across enterprise IT services.
• Scaling AI in large enterprises typically requires cleaning up legacy systems, simplifying architectures, and improving data readiness.
• Demand conditions remain stable, supported by continued large-deal activity, with ~USD2bn of Total Contract Value (TCV) wins secured over the last four quarters.

Outlook

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• The company expects recent deal conversions to support near-term growth.
• Concerns around terminal value and AI-led disruption may restrict near-term multiple re-rating.
• We value the stock at 26x FY28E Earnings Per Share (EPS), arriving at a Target Price (TP) of INR3,400.

Recommendation

We reiterate our BUY rating on the stock.