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Mphasis Q2 Review - Growth Convergence With Direct Business To Aid Valuation: Motilal Oswal

Mphasis Q2 Review - Growth Convergence With Direct Business To Aid Valuation: Motilal Oswal

An employee works on a laptop. (Photographer: Anindito Mukherjee/Bloomberg)
An employee works on a laptop. (Photographer: Anindito Mukherjee/Bloomberg)

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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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MPHL-20211023-MOSL-RU-PG010.pdf

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