Mphasis Gets Bullish Recommendation from Prabhudas Lilladher with a Target Price of Rs 3000

Mphasis Posts In-Line Q4FY26 Performance, Guides for FY27 Growth

Mphasis Limited (MPHL) has reported a largely in-line fourth quarter (Q4) fiscal year 2026 (FY26) performance, with revenue growth of 2.5% quarter-on-quarter (QoQ) on a constant currency (CC) basis. This growth was driven by the ramp-up of deal wins in the Banking and Financial Services (BFS) and Insurance segments, partly offset by weakness in the Technology, Media, and Telecommunications (TMT) segment.

For the full FY26, MPHL's revenue grew 6.7% year-on-year (YoY) in CC, or approximately 6.9% on a reported basis. However, growth excluding the Logistics segment, which was impacted by client-specific restructuring, remained strong at around 15.5%. This reflects healthy underlying momentum, driven by momentum in BFS and Insurance, supported by strong traction in top accounts and rising demand for platform-led, AI-driven transformation. This transformation is underpinned by sustained investments in intellectual property (IP), AI capabilities, and large deal conversion.

MPHL's deal momentum remained strong, with FY26 net new total contract value (TCV) at US$2.1 billion, a 68% increase year-over-year. A significant share of these deals were AI-led, and the company's pipeline is now approximately 69% AI-driven, providing strong visibility. Against this backdrop, management has guided for high single-digit to low double-digit revenue growth in FY27, supported by continued strength in BFS and Insurance and a gradual recovery in the Logistics segment.

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While operating leverage from platform-led delivery remains a tailwind, incremental investments in AI platforms, go-to-market (GTM), and leadership could moderate margin expansion. Consequently, we have trimmed our FY28E margin estimates marginally by approximately 10 basis points.

Our outlook for MPHL is positive, with expectations of a USD revenue compound annual growth rate (CAGR) of approximately 9.7% and INR earnings CAGR of 15% over FY26-28E. Based on these estimates, we value MPHL at 23 times FY28E earnings per share (EPS), leading to a target price of INR 3,000 and maintaining our BUY rating.