Mphasis Target Price Revised to Rs 2625 by Choice Institutional Equities

Mphasis Reports Strong Q4FY26 Performance, Maintains BUY Rating

Mphasis, a leading digital transformation services company, has reported a strong performance in the fourth quarter of fiscal year 2026 (Q4FY26). The company's revenue grew by 6% quarter-on-quarter (QoQ) to INR [insert amount], while its constant currency (CC) growth stood at 2.5% QoQ.

The company's deal traction was a key driver of its Q4FY26 performance, with deal value (TCV) growing by a strong 67.5% year-on-year (YoY) in fiscal year 2026 (FY26). This growth was accompanied by improved conversion rates, which further boosted the company's performance. Mphasis's NeoIPTM (Neotellectual Property and Technology Management) platform is exhibiting platform-led differentiation, winning deals through its IP-led capabilities.

The company's underlying trajectory appears resilient, aided by a strong and expanding pipeline, which grew by 38% led by the banking, financial services, and insurance (BFSI) sector. Notably, the increasing mix of AI-led deals (69% of the pipeline) signals a structural shift in demand, positioning Mphasis well to benefit from the enterprise adoption cycle led by growing AI opportunity.

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Financial Projections

We expect Mphasis's revenue, earnings before interest and tax (EBIT), and profit after tax (PAT) to expand at a compound annual growth rate (CAGR) of 12.2%, 14.3%, and 14.2% over the period of FY26 to FY29E, respectively.

Outlook

We maintain our BUY rating for Mphasis, with a revised target price of INR 2,625 based on our estimate of FY28E earnings per share (EPS) of INR 131.3. This implies a price-to-earnings (PE) ratio of 20x.

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