Moneycontrol Pro: Here’s why investors should accumulate Mphasis for longterm

In a few ideas for profit from Moneycontrol Pro, Nitin Sharma of Moneycontrol.Com talks about a stock that he is tracking closely, Mphasis.

Mphasis is a mid-sized IT company and derives 55 percent of its revenues from the banking and finance sector. The company’s 80 percent of business comes from the North American market.

Segment wise direct channel contributes around 80-90 percent of the revenues and has grown 20 percent year-on-year for the last 12 quarters.

In the last five years, the company's EBITDA margin expanded by 400 bps to 18.5 percent, while it maintained the PAT margin of 12 to 13 percent annually. At the current price, Mphasis trade at FY24 PE of 26 times broadly in line with peers.

We believe that fundamentally, the stock has further upside, but given the current market volatility, we are a bit more cautious. We see emphasis as a long-term bet and advise investors to wait for a better entry point.

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