Mphasis Q2 Review - Growth Convergence With Direct Business To Aid Valuation: Motilal Oswal
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Motilal Oswal Report
Mphasis Ltd.'s Q2 FY22 performance was led by a 9.9% constant currency QoQ growth in the Direct business, while the DXC vertical (6% of revenue) again declined (-24.5% QoQ CC).
Ebit margin adjusted for one-time M&A charge remained stable (-10bp QoQ). It reported a net new deal TCV of $241 million in Q2 FY22.
With the management reiterating its industry-leading growth guidance in the Direct business, the standout growth in Direct should continue (34% YoY in FY22E).
We see a strong new-gen deal pipeline (+13% QoQ/28% YoY) as testimony to the strength of the demand environment. This should lead to improved medium-term growth visibility in the business.
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