Mphasis Seen Reaching Rs 3000 Target by Prabhudas Lilladher

Mphasis Shifts Operating Model, Launches Enterprise AI Platform

Mphasis, a leading digital transformation company, is undergoing a significant transformation of its operating model. The company is shifting away from traditional services and towards a combination of subscription/Annual Recurring Revenue (ARR) + implementation + managed service model. This new operating model aims to scale to 20-30% revenue mix in the medium term.

Key Developments

Mphasis has launched Mphasis Tria, its new enterprise AI platform, designed to capture institutional memories and derive ontologies on top. This platform-led service approach is expected to drive business accountability, ownership, and enterprise AI governance, thereby de-risking business outcomes and scaling AI transition. The company highlighted strong deal traction, with its pipeline growing 4x over 18 months.

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Deal Traction and Mix

The company's large deal (USD 100m+) concentration mix has improved notably to 29% in FY26 compared to 18% in FY25. As a result, the average deal size has also improved to USD 75m in FY26 from USD 54m in FY25. Mphasis is doubling down on consolidation deals and gaining wallet share on blue-chip accounts.

Outlook and Risks

While the company's deal construct is growth and margin supportive, it is backed by upfront capital allocations and measured risk tied to scaling presumptions. However, there is a downside risk to cash conversion (FY27E/FY28E) if a similar deal construct were to escalate going forward.

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Recommendation

We maintain our revenue and margin estimates for FY27E & FY28E. Reiterate our BUY rating with an unchanged Target Price (TP) of INR 3,000.