24 October 2020
2QFY21 Results Update | Sector: Technology
Mphasis
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Financials & Valuations (INR b)
Y/E Mar
2020 2021E
Sales
88.4
98.8
EBIT
14.2
16.0
PAT
11.8
12.5
EPS (INR)
61.5
66.2
EPS Gr. (%)
9.6
7.6
BV/Sh. (INR)
312.6
312.2
Ratios
RoE (%)
21.4
21.4
RoCE (%)
18.3
17.6
Payout (%)
56.9
45.3
Valuations
P/E (x)
22.4
20.8
P/BV (x)
4.4
4.4
EV/EBITDA (x)
14.8
13.3
Div Yield (%)
2.5
2.2
MPHL IN
193
257.9 / 3.4
1463 / 612
-8/71/45
379
CMP: INR1,382
TP: INR1,665 (+21%)
Upgrade to Buy
Continued strength in Direct business to drive rerating
Strong beat on revenues; Highest ever deal wins
2022E
112.5
18.7
14.7
78.0
17.9
356.6
24.1
20.2
51.3
17.7
3.9
10.7
2.9
Mphasis (MPHL) reported solid growth in 2Q, despite 13% QoQ decline in
the DXC business. This should assuage concerns on the potential growth
impact from continued weakness in the DXC business. Our analysis suggests
Mphasis’ exposure to DXC should reduce to 14% of revenues in FY22, half
the exposure for FY19. This should lower the multiple discount in MPHL
shares, v/s peers such as LTI (currently at 25%), despite comparable growth
in the Direct business. Hence, we upgrade Mphasis to Buy.
Moreover, all-time high net new deal win TCV (USD360m; +100% YoY) in 2Q
suggests momentum in the Direct business would continue for some time.
This, in addition to bottoming out of DXC in FY22, should help MPHL deliver
12% USD CC growth next year.
The EBIT margin expanded 140bp QoQ to 16.1% (moderately ahead of our
estimate of 15.8%) on the back of operational efficiencies. We expect MPHL
to end FY21 near the top-end of the EBIT margin guidance range of 15.5–
16.5% and likely exceed this in FY22.
We upgrade our FY21/FY22E EPS by ~7%, largely driven by (a) revenue beat
in the quarter, (b) recent large deal wins, and (c) an optimistic outlook.
Notwithstanding the DXC overhang, with strong digital transformation
capabilities and low exposure to impacted verticals, we believe Mphasis is
well-positioned to be a key beneficiary in the current context. Our TP implies
21x FY22E. Upgrade to Buy.
Mphasis reported revenue (USD) / EBIT / PAT growth of 7%/13%/9% YoY v/s
our estimates of 3%/6%/4% YoY. For 1H, the company reported revenue
(USD) / EBIT / PAT growth of 5%/13%/7% YoY.
Revenue growth of 6% QoQ CC beat our estimate of 2.2% QoQ CC.
Segment-wise, Direct revenue saw sharp recovery and grew 10.9% QoQ CC.
DXC’s (16% of revenue) sharp decline of 15.5% QoQ CC is more than
expected.
BPO (+35% QoQ) led growth as onsite headcount increased (96% QoQ) in
the service line. IMS reported decent growth of (2% QoQ), while ADM
declined (-1% QoQ). Excluding BPO, other service lines reported a headcount
reduction.
In terms of verticals, BCM (17% QoQ) and Others (6% QoQ) led growth.
Insurance reported decent growth (2.5% QoQ), while IT, Communication &
Entertainment (ITCE) (-11% QoQ) and Logistics (-6% QoQ) remained
challenged.
Among the geographies, the Americas (9% QoQ) and India (18% QoQ) were
the growth drivers, while EMEA (-3% QoQ) and RoW (-2% QoQ) declined
sequentially.
The gross margin expanded 150bp QoQ, marginally ahead of our estimate.
Benefits from improved gross margins were partially offset by higher-than-
expected SGA.
Revenues beat estimates
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Sep-20
56.2
16.2
22.1
5.5
Jun-20 Sep-19
56.2
52.2
14.2
13.7
23.7
28.8
6.0
5.3
FII Includes depository receipts
Mukul Garg – Research analyst
(Mukul.Garg@MotilalOswal.com)
Heenal Gada– Research analyst
(Heenal.Gada@MotilalOswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
Mphasis
The EBIT margin expanded 40bp QoQ to 16.1%, marginally ahead of our
estimate of 15.8%.
PAT grew 9.5% YoY to INR3.0b (v/s est. of INR2.8b), largely driven by higher-
than-expected operating income.
Deal wins of USD360m in the Direct business (37% in new-generation services) is
the highest ever TCV win reported in a quarter. The company won a large deal in
the BFSI space in the quarter.
Key highlights from management commentary
Management alluded that clients are shifting from the crisis management mode
toward accelerating remote transformation in an attempt to adjust to the new
reality. A shift has been seen from omni-channel to digital due to the pandemic.
The company has been winning wallet share in cases where the customers are
undergoing vendor consolidation.
The deal pipeline is robust and has increased by 75% YoY. Cloud spend has been
pulled forward and has grown 3x in the deal pipeline.
Management is confident of positive growth momentum in BCM and expects
revenue conversion in Insurance on the back of a robust pipeline.
The Direct business in Europe is a key focus area with a strong pipeline. It is
expected to be a growth driver for the remainder of FY21. Furthermore, the
Direct business has achieved a USD1b annualized run-rate.
Continuous improvement has been seen in the client pyramid, driven by
expanding wallet share in large clients and consistent new client wins.
Furthermore, healthy conversion of clients (50%) is happening from each stage
to the next.
Management reiterated its EBIT margin guidance band to be 15.5–16.5% for
FY21 as it looks toward continued investments in the business.
The company is undertaking efforts to improve the longevity of the DXC
relationship. 2Q performance for the Europe / ADM / IMS segment was
impacted by DXC.
Valuation and view – industry-leading performance in FY21
Impressive deal wins over the last two to three quarters and a healthy deal
pipeline would likely drive good growth in the near term. While the DXC
business (~16% of revenues) related overhang persists, strong traction in Direct
International should continue to drive overall performance. Guidance on the
ability to defend margins is a key positive.
The ability to win multiple large digital transformation deals proactively and
under vendor consolidation scenarios indicates the strength in sales and delivery
capabilities.
High exposure to largely stable verticals (BFSI – ~57% of revenues) should also
help mitigate risks to some extent.
The stock is currently trading at ~21x FY21E EPS. We value the stock at ~21x
FY22E EPS.
Upgrade to Buy.
24 October 2020
2
 Motilal Oswal Financial Services
Mphasis
Quarterly Perform.
Y/E March
Revenue (USD m)
QoQ (%)
Revenue (INR m)
YoY (%)
GPM (%)
SGA (%)
EBITDA
EBITDA Margin (%)
EBIT
EBIT Margin (%)
Other income
ETR (%)
PAT
QoQ (%)
YoY (%)
EPS (INR)
Jun 19
297
1.8
20,626
13.3
28.4
10.2
3,743
18.1
3,193
15.5
541
25.1
2,647
-0.5
2.5
14.2
(INR m)
Var. (% /
bp)
4.1
418bp
4.5
485bp
74bp
55bp
5.6
19bp
6.5
31bp
-18.0
90bp
4.9
4.4
FY20
Sep 19 Dec 19
305
318
2.6
4.3
21,581 22,767
12.7
15.5
28.8
28.7
10.0
10.0
4,052
4,269
18.8
18.8
3,470
3,694
16.1
16.2
351
362
24.2
24.0
2,733
2,937
3.3
7.5
0.9
5.7
14.2
15.2
Mar 20
320
0.6
23,462
15.9
29.3
10.4
4,441
18.9
3,831
16.3
526
14.9
3,532
20.3
32.7
18.8
Jun 20
305
-4.5
22,882
10.9
28.9
10.7
4,178
18.3
3,583
15.7
377
27.0
2,750
-22.1
3.9
14.7
FY21E
Sep 20 Dec 20E Mar 21E
327
335
351
7.2
2.2
5.0
24,354 25,144 26,373
12.8
10.4
12.4
30.3
31.1
31.3
11.7
12.3
12.5
4,524
4,745
4,962
18.6
18.9
18.8
3,924
4,139
4,325
16.1
16.5
16.4
261
466
481
25.9
25.0
25.0
2,992
3,294
3,443
8.8
10.1
4.5
9.5
12.2
-2.5
15.9
17.5
18.3
FY20
1,239
10.8
88,436
14.4
28.8
10.2
16,505
18.7
14,188
16.0
1,780
21.8
11,849
10.4
62.4
FY21E
1,319
6.4
98,754
11.7
30.5
11.8
18,410
18.6
15,971
16.2
1,585
25.7
12,479
5.3
66.2
Est.
Sep 20
315
3.0
23,307
8.0
29.6
11.2
4,285
18.4
3,684
15.8
318
25.0
2,852
3.7
4.4
15.2
Key Perfor. Indicators
Y/E March
1Q
Margins
Gross Margin
EBIT Margin
Net Margin
Operating metrics
Headcount
Deal Win TCV (USD m)
Key Verticals (YoY%)
BFS
Insurance
IT, Comm, Ent
Key Geographies (YoY%)
North America
Europe
28
15
13
25,499
151
5
15
6
10
3
FY20
2Q
29
16
13
26,963
174
10
10
5
9
4
3Q
29
16
13
27,289
189
16
7
5
11
15
4Q
29
16
15
26,398
201
13
4
-4
8
18
1Q
29
16
12
26,143
259
12
-12
-12
0
15
FY21
2Q
30
16
12
27,148
360
25
-9
-21
6
15
3Q
31
16
13
4Q
31
16
13
29
16
13
26,398
715
11
9
3
10
10
30
16
13
FY20
FY21
Key highlights from management commentary
Management alluded that clients are shifting from the crisis management mode
toward accelerating remote transformation in an attempt to adjust to the new
reality. A shift has been seen from omni-channel to digital due to the pandemic.
The company has been winning wallet share in cases where the customers are
undergoing vendor consolidation.
The deal pipeline is robust and has increased by 75% YoY. Cloud spend has been
pulled forward and has grown 3x in the deal pipeline.
Management is confident of positive growth momentum in BCM and expects
revenue conversion in Insurance on the back of a robust pipeline.
The Direct business in Europe is a key focus area with a strong pipeline. It is
expected to be a growth driver for the remainder of FY21. Furthermore, the
Direct business has achieved a USD1b annualized run-rate.
Continuous improvement has been seen in the client pyramid, driven by
expanding wallet share in large clients and consistent new client wins.
3
24 October 2020
 Motilal Oswal Financial Services
Mphasis
Furthermore, healthy conversion of clients (50%) is happening from each stage
to the next.
Management reiterated its EBIT margin guidance band to be 15.5–16.5% for
FY21 as it looks toward continued investments in the business.
The company is undertaking efforts to improve the longevity of the DXC
relationship. 2Q performance for the Europe / ADM / IMS segment was
impacted by DXC.
Revenues beat estimates
Mphasis reported revenue (USD) / EBIT / PAT growth of 7%/13%/9% YoY v/s our
estimates of 3%/6%/4% YoY. For 1H, the company reported revenue (USD) /
EBIT / PAT growth of 5%/13%/7% YoY.
Revenue growth of 6% QoQ CC beat our estimate of 2.2% QoQ CC.
Segment-wise, Direct revenue saw sharp recovery and grew 10.9% QoQ CC.
DXC’s (16% of revenue) sharp decline of 15.5% QoQ CC is more than expected.
BPO (+35% QoQ) led growth as onsite headcount increased (96% QoQ) in the
service line. IMS reported decent growth of (2% QoQ), while ADM declined (-1%
QoQ). Excluding BPO, other service lines reported a headcount reduction.
In terms of verticals, BCM (17% QoQ) and Others (6% QoQ) led growth.
Insurance reported decent growth (2.5% QoQ), while IT, Communication &
Entertainment (ITCE) (-11% QoQ) and Logistics (-6% QoQ) remained challenged.
Among the geographies, the Americas (9% QoQ) and India (18% QoQ) were the
growth drivers, while EMEA (-3% QoQ) and RoW (-2% QoQ) declined
sequentially.
The gross margin expanded 150bp QoQ, marginally ahead of our estimate.
Benefits from improved gross margins were partially offset by higher-than-
expected SGA.
The EBIT margin expanded 40bp QoQ to 16.1%, marginally ahead of our
estimate of 15.8%.
PAT grew 9.5% YoY to INR3.0b (v/s est. of INR2.8b), largely driven by higher-
than-expected operating income.
Deal wins of USD360m in the Direct business (37% in new-generation services) is
the highest ever TCV win reported in a quarter. The company won a large deal in
the BFSI space in the quarter.
Contribution
to rev (%)
59.0
26.5
14.5
Growth
QoQ (%)
-0.9
35.1
2.3
Growth
YoY (%)
-1.0
75.0
-21.2
Source: Company, MOFSL
Exhibit 1: BPO reported strong growth, while other services were muted
Services
Application Services
BPO
Infrastructure Services
Exhibit 2: America and India were the growth drivers during the quarter
Geographies
North America
Europe
India
Rest of the world
Contribution
to rev (%)
78.1
10.8
4.5
6.5
Growth
Growth
QoQ (%)
YoY (%)
9.0
5.9
-2.8
14.7
18.3
-7.4
-1.8
31.0
Source: Company, MOFSL
24 October 2020
4
 Motilal Oswal Financial Services
Mphasis
Exhibit 3: BCM continued to stand strong, while ITCE declined sequentially
Verticals
Banking and Capital Markets
Insurance
IT, Communication and Entertainment (ITCE)
Logistics & Transportation
Others
Contribution
to rev (%)
53.4
9.5
11.8
12.3
13.0
Growth
Growth
QoQ (%)
YoY (%)
17.4
25.3
2.5
-9.0
-10.6
-21.3
-6.2
-1.5
6.2
3.9
Source: Company, MOFSL
Exhibit 4: Growth across client buckets
Top Client
Top 2-5 Clients
Top 6-10 Clients
Contribution
to rev (%)
12
27
11
Growth
QoQ (%)
7.2
7.2
31.0
Growth
YoY (%)
-7.9
20.9
31.3
Source: Company, MOFSL
Exhibit 5: Decreasing share of revenues from DXC
Share of revenue (%)
26%
Direct Intenational
28%
24%
DXC
16%
14%
70%
68%
74%
82%
84%
FY18
FY19
FY20
FY21E
FY22E
Source: Company, MOFSL
Exhibit 6: Mphasis trades lower v/s peers
PE (FY22E)
24
17
11
12
18
20
24
Cyient
Zensar
Persistent
Mphasis
Mindtree
LTI
Coforge
Source: Company, MOFSL
24 October 2020
5
 Motilal Oswal Financial Services
Mphasis
Valuation and view – industry-leading performance in FY21
Impressive deal wins over the last two to three quarters and a healthy deal
pipeline would likely drive good growth in the near term. While the DXC
business (~16% of revenues) related overhang persists, strong traction in Direct
International should continue to drive overall performance. Guidance on the
ability to defend margins is a key positive.
The ability to win multiple large digital transformation deals proactively and
under vendor consolidation scenarios indicates the strength in sales and delivery
capabilities.
High exposure to largely stable verticals (BFSI – ~57% of revenues) should also
help mitigate risks to some extent.
The stock is currently trading at ~21x FY21E EPS. We value the stock at ~21x
FY22E EPS.
Upgrade to Buy.
Exhibit 7: Over the long term, multiples average to ~14x
32.0
24.0
16.0
8.0
0.0
Mphasis P/E
Source: Bloomberg, MOSL
Exhibit 8: Revision to our estimates
Change in Estimates
INR/USD
USD Revenue - m
USD Revenue - growth
EBIT Margin (%)
EPS - INR
FY21E
75.1
1,319
6.4
16.2
66.2
Revised
FY22E
76.5
1,479
12.1
16.6
78.0
FY21E
75.3
1,278
3.1
15.6
62.2
Earlier
FY22E
76.5
1,405
9.9
15.8
73.0
FY21E
-0.2%
3.2%
330bp
62bp
6.5%
Change
FY22E
0.0%
5.3%
221bp
82bp
6.9%
Source: MOFSL
24 October 2020
6
 Motilal Oswal Financial Services
Mphasis
Exhibit 9: Operating metrics
1QFY20
Geographical Contribution (%)
Americas
EMEA
India
RoW
Vertical Contribution (%)
Banking and Capital market
Insurance
IT, Comm. & Entertainment
Logistics & Transportation
Others
Revenue by Project Type (%)
Time and Material
Transaction Based
Fixed Price
Revenue by Delivery Location (%)
Onsite
Offshore
Secondary Market Segment (%)
Direct International
DXC
Others
Service Type (%)
Application services
BPO
Infrastructure services
Client Contribution (%)
Top Client
Top 2-5 Clients
Top 6-10 Clients
New Clients added
Clients Contributing More than:
$100m+
$75m+
$50m+
$20m+
$10m+
$5m+
$1m+
Headcount
Onsite - billable
Tech services
BPO
Offshore - billable
Tech services
BPO
Total billable headcount
Total headcount
78.8
10.7
5.0
5.5
44.7
11.7
16.6
12.9
14.2
63.1
13.3
23.6
58.2
41.8
73.2
24.6
2.2
65.4
15.0
19.7
14
24
9
14
1
2
4
7
14
27
72
2QFY20
79.2
10.1
5.3
5.4
45.8
11.2
16.1
13.4
13.4
59.7
14.3
26.0
58.2
41.8
73.8
24.1
2.1
64.0
16.3
19.7
14
24
9
8
2
2
4
7
14
29
76
3QFY20
77.5
11.5
5.1
5.9
45.5
11.2
15.7
13.9
13.6
57.8
15.5
26.7
58.1
41.9
74.2
23.4
2.4
61.0
18.1
20.9
13
25
9
14
2
3
5
7
15
30
77
4QFY20
76.3
12.3
5.0
6.4
45.7
11.4
15.0
14.6
13.2
56.9
15.2
27.9
57.1
42.9
75.4
22.5
2.1
64.1
18.0
17.8
13
25
9
9
2
3
5
7
15
31
76
1QFY21
76.8
11.9
4.1
7.1
48.8
10.0
14.1
14.0
13.1
58.7
15.2
26.1
59.9
40.1
78.5
20.1
1.5
63.8
21.1
15.1
12
27
9
6
2
4
4
7
16
32
79
2QFY21
78.1
10.8
4.5
6.5
53.4
9.5
11.8
12.3
13.0
59.1
15.8
25.1
58.7
41.3
81.8
16.2
2.0
59.0
26.5
14.5
12
27
11
5
2
4
4
8
17
31
80
4,648
522
11,832
3,983
20,985
25,500
4,708
822
12,550
4,094
22,174
26,964
4,575
1,244
12,780
4,553
23,152
27,289
4,221
1,199
12,734
4,286
22,440
26,398
3,783
1,382
12,473
4,592
22,230
26,143
3,357
2,715
12,358
4,519
22,949
27,148
Source: Company, MOFSL
24 October 2020
7
 Motilal Oswal Financial Services
Mphasis
Financials and valuations
Income Statement
Y/E
Revenues
Change (%)
Cost Of Goods Sold
SG&A Expenses
Amort. of Stock Compensation
Amortization of Goodwill
EBITDA
% of Net Sales
Depreciation
Interest
Other Income
EO Item (net)
PBT
Tax
Rate (%)
PAT
Net Income
Change (%)
Mar 15
57,949
-6.9
42,540
6,708
0
0
8,701
15.0
980
0
1,687
0
9,408
2,630
28.0
6,778
6,778
-8.6
Mar 16
60,879
5.1
44,708
7,201
0
0
8,970
14.7
744
0
1,712
0
9,938
2,696
27.1
7,242
7,242
6.9
Mar 17
60,763
-0.2
43,649
7,426
0
0
9,688
15.9
592
0
2,246
0
11,342
3,155
27.8
8,187
8,187
13.0
Mar 18
65459
7.7
47,309.0
7,525
0
0
10,625
16
709
0.0
1,490
0
11,406
2,900
25
8,506
8,506
3.9
Mar 19
77310
18.1
55,734.0
8,337
0
0
13,239
17
759
0.0
1,592
0
14,072
3,339
24
10,733
10,733
26.2
Mar 20
88436
14.4
62,951.0
8,980
0
0
16,505
19
2,317
0.0
967
0
15,155
3,306
22
11,849
11,849
10.4
Mar 21E
98,754
11.7
68,671
11,673
0
0
18,410
18.6
2,438
0
814
0
16,785
4,307
25.7
12,479
12,479
5.3
(INR m)
Mar 22E
1,12,514
13.9
77,097
13,918
0
0
21,499
19.1
2,829
0
1,131
0
19,801
5,089
25.7
14,712
14,712
17.9
Balance Sheet
Y/E
Share Capital
Reserves
Net Worth
Loans
Capital Employed
Gross Block
Less : Depreciation
Net Block
CWIP
Goodwill
Investments
Deferred tax assets
Curr. Assets
Debtors
Cash
Loans & Advances
Current Liab. & Prov
Net Current Assets
Application of Funds
Mar 15
2,101
52,697
54,798
6,253
61,051
10,055
8,499
1,556
318
21,781
14,431
826
35,014
11,371
13,311
10,332
12,875
22,139
61,051
Mar 16
2,102
60,828
62,930
5,338
68,268
9,300
8,128
1,172
953
22,942
21,118
941
31,968
12,333
8,783
10,852
10,826
21,142
68,268
Mar 17
2,104
59,420
61,524
2,760
64,284
3,400
1,167
2,233
387
14,069
23,956
3,527
28,998
10,871
6,315
11,812
8,888
20,110
64,282
Mar 18
1,933
52,885
54,818
3,949
58,767
4,304
2,478
1,826
399
17,015
17,821
1,057
31,742
13,560
7,148
11,034
11,093
20,649
58,767
Mar 19
1,862
50,636
52,498
5,456
57,954
5,357
3,244
2,113
406
19,585
13,292
814
36,531
17,687
6,618
12,226
14,787
21,744
57,954
Mar 20
1,865
56,431
58,296
13,092
71,388
12,965
4,235
8,730
553
21,405
13,257
2,157
40,297
16,947
11,550
11,800
15,011
25,286
71,388
Mar 21E
1,866
56,395
58,261
12,072
70,333
13,897
5,871
8,026
374
20,885
16,801
1,349
36,850
18,225
6,833
11,791
13,951
22,898
70,333
(INR m)
Mar 22E
1,793
62,152
63,945
11,072
75,017
15,697
8,700
6,997
350
20,885
16,801
1,349
43,758
20,115
11,852
11,791
15,123
28,635
75,017
24 October 2020
8
 Motilal Oswal Financial Services
Mphasis
Financials and valuations
Ratios
Y/E
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout %
Valuation (x)
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios
Debtors (Days)
Fixed Asset Turnover (x)
Leverage Ratio
Debt/Equity Ratio(x)
Mar 15
32.3
36.9
260.8
16.0
49.6
42.7
37.3
30.8
4.6
5.3
1.2
12.8
11.5
16.7
77
31.0
0.1
Mar 16
34.5
38.0
299.4
20.0
58.0
40.0
36.2
29.5
4.4
4.6
1.5
12.3
11.2
17.0
71
44.6
0.1
Mar 17
38.9
41.7
292.4
17.0
43.7
35.4
33.0
27.1
4.3
4.7
1.2
13.2
12.4
18.5
70
35.7
0.0
Mar 18
44.0
47.7
283.6
20.0
45.4
31.3
28.9
23.1
3.7
4.9
1.5
14.6
13.8
22.1
68
32.3
0.1
Mar 19
56.1
61.7
281.9
27.0
48.5
24.5
22.3
18.3
3.1
4.9
2.0
20.0
18.4
26.8
74
39.3
0.1
Mar 20
61.5
76.0
312.6
35.0
56.9
22.4
18.1
14.8
2.8
4.4
2.5
21.4
18.3
26.5
71
16.3
0.2
Mar 21E
66.2
79.9
312.2
30.0
45.3
20.8
17.2
13.3
2.5
4.4
2.2
21.4
17.6
25.7
65
11.8
0.2
Mar 22E
78.0
97.8
356.6
40.0
51.3
17.7
14.1
10.7
2.0
3.9
2.9
24.1
20.2
30.0
62
15.0
0.2
Cash Flow Statement
Y/E
CF from Operations
Chg. in Wkg. Capital
Net Operating CF
Net Purchase of FA
Free Cash Flow
Net Purchase of Invest.
Net Cash from Invest.
Proceeds from equity
Proceeds from LTB/STB
Dividend Payments
Net CF from Financing
Free Cash Flow
Net Cash Flow
Opening Cash Balance
Add: Net Cash
Closing Cash Balance
Mar 15
7,900
-50
7,850
-614
7,236
3,807
3,193
0
1,601
-4,033
-2,432
7,236
8,610
4,697
8,610
13,307
Mar 16
7,871
-3,531
4,340
-995
3,345
-7,848
-8,843
5,933
-915
-5,045
-26
3,345
-4,529
13,307
-4,529
8,778
Mar 17
6,193
-1,436
4,757
-1,087
3,670
6,035
4,948
-5,305
-2,578
-4,290
-12,172
3,670
-2,467
8,778
-2,467
6,311
Mar 18
11,685
294
11,979
-314
11,665
3,189
2,875
-10,577
1,189
-4,637
-14,024
11,665
830
6,311
830
7,140
Mar 19
11,735
-1,625
10,110
-1,053
9,057
1,959
906
4,427
1,507
-17,482
-11,547
9,057
-531
7,140
-531
6,609
Mar 20
12,823
1,390
14,213
-9,081
5,132
-1,785
-10,866
1,783
7,636
-7,836
1,584
5,132
4,931
6,609
4,931
11,540
Mar 21E
15,725
-2,329
13,396
-1,555
11,841
-3,024
-4,579
-5,797
-1,020
-6,717
-13,534
11,841
-4,717
11,540
-4,717
6,823
(INR m)
Mar 22E
17,541
-718
16,823
-1,776
15,047
0
-1,776
-73
-1,000
-8,956
-10,029
15,047
5,018
6,823
5,018
11,841
24 October 2020
9
 Motilal Oswal Financial Services
Mphasis
NOTES
24 October 2020
10
 Motilal Oswal Financial Services
Mphasis
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
24 October 2020
11
 Motilal Oswal Financial Services
Mphasis
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
-
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on
the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL
even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
24 October 2020
12