Motilal Oswal Reiterates Buy on Mphasis, Sets Price Target at Rs 3100

Mphasis Charts a New Course with AI-Led Transformation

Mphasis, a leading IT services company, has embarked on a significant transition from a services-led model to a platform-led, outcome-based AI model. This shift is aimed at improving pricing power and client stickiness over time. The company's management presented its vision at the recent Analyst Day, where the launch of Mphasis TriaTM, an Enterprise Agency platform, took center stage.

The new platform is designed to provide reusable IP, AI orchestration, and transformation-led delivery, enabling the company to move away from linear headcount addition and towards platform attachment and reusable solution archetypes. This strategic move is expected to drive growth over the next few years, with platform attach rate emerging as a key leading indicator.

Mphasis' Transition to a "Platform + People" Model

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As part of its transformation, Mphasis is repositioning itself for an AI-led services cycle. The company aims to structurally reshape its business model rather than merely adding AI wrappers around existing services. This strategic shift is a critical step towards ensuring long-term sustainability and growth.

Forecast and Valuation

Our research team forecasts a USD revenue compound annual growth rate (CAGR) of approximately 10% over FY26-28, with an INR profit after tax (PAT) CAGR of around 15%. Based on these projections, we value the stock at 24 times FY28 estimated earnings per share (EPS), arriving at a target price of INR3,100.

Recommendation

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We reiterate our BUY rating on the stock, based on its potential for growth and transformation under its new business model.