REDUCE Mphasis Ltd - Challenges persist - Emkay

Emkay hosted Mr Ganesh Murthy, CFO, Mphasis for investor meetings in Mumbai recently. We present key takeaways:

- Challenges within core HP Enterprise Svcs continue, co expects increased traction in HP Technology Svcs and HP Imaging and Printing Group.

- Direct channel revenue growth to remain strong. Recent deal wins in domestic business lend visibility.

- Co targeting EBIT margins of 15-18% in FYOct'12. Lower investments in Javelina, absence of RSU charge, fresher hiring and consolidation of facilities to drive margins up.

- Inexpensive valuations at ~9x FYOct'11/Oct'12E EPS with cash at ~26% of mktcap limits downsides. Improvement in op performance needs to preclude stock upsides.

Source : Equity Bulls

Keywords