18 June 2015
Update | Sector: Technology
Mphasis
BSE Sensex
27,116
S&P CNX
8,175
CMP: INR385
TP: INR400 (+4%)
Neutral
Re-aligning to the “VUCA” environment
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val(INRm)/Vol‘000
Free float (%)
MPHL IN
210.1
477/331
2/9/-21
80.9
1.3
57/138
39.5
Focused on servicing the BFSI vertical through GRC and digital services
Financial Snapshot (INR b)
Y/E Mar
2015 2016E 2017E
Sales
57.9 61.0 66.1
EBITDA
8.7
9.4
10.4
PAT
6.8
7.6
8.1
EPS (INR)
32.3 36.0 38.8
EPS Gr. (%)* -8.6
11.5
7.8
BV/Sh. (INR) 260.8 274.3 289.1
RoE (%)
12.8 13.4 13.8
RoCE (%)
13.1 13.8 14.9
Payout (%)
49.6 52.1 51.6
Valuations
P/E (x)
11.9 10.7
9.9
P/BV (x)
1.5
1.4
1.3
EV/EBITDA(x) 6.8
5.6
4.8
Div yld (%)
4.2
4.9
5.2
*
Annualized values for 5m FY14E
Shareholding pattern (%)
Mar-15 Dec-14 Mar-14
Promoter 60.5
DII
FII
5.0
24.3
60.5
4.5
26.5
60.5
4.6
26.1
In an environment characterized by volatility, uncertainty, complexity and
ambiguity (VUCA), MPHL is looking at critical success factors of agility, disruptive
innovation, specialization and branding to drive growth.
MPHL is targeting above-industry growth for International Direct channel and
Products segment (~60% of revenues) over FY16-18, with overall EBIT margin of
14-16%.
Within International Direct business, MPHL is eyeing Governance, Risk and
Compliance (GRC) and Digital to drive future growth and is targeting the
contribution from the segments to reach 50% of Direct Channel revenues from
the current 36%+.
Problems in HP Channel yet to abate. Financial performance may remain muted
as that weighs on overall business. Neutral.
Targets above-industry growth for International Direct business
MPHL aims to grow its International Direct business (55% of revenues) and
Products segment (4% of business) at a rate above the industry average over
FY16-18. It is targeting overall company EBIT margin of 14-16% (v/s 13.3% in
FY15). Incentives of senior leaders are aligned to these objectives.
Direct channel growth to come from BFSI
Banking & Capital markets (BCM) and Insurance have been the company’s focus
segments within the Direct business. Over FY12-15, the segment’s revenues
have doubled while non-BFSI segments have remained flat.
Capabilities in specialized services within the chosen vertical
Global Financial Institutions paid USD57b in fines and penalties in 2014 v/s
USD2b in 2008. Leading global banks and insurance companies are increasingly
going digital, and Forrester predicts the spending in Emerging IT Services to
increase from 28% in 2015 to 42% in 2018. These trends have driven MPHL’s
decision to specialize in GRC and Digital, to achieve its three-year objectives.
Others
10.2
8.6
8.9
FII Includes depository receipts
Stock Performance (1-year)
MphasiS
600
525
450
375
300
Sensex - Rebased
HP Channel to keep overall financial performance dampened
While valuations at 10.7x/9.9x FY16E/17E are at a discount to peers
(particularly after factoring the Cash Balance), sluggishness in the HP channel
and mortgage originations in the US continue to pose challenges to its Digital
Risk business. Revenue growth confidence would be the most important factor
to change our stance on the stock because margins too, will struggle to recover
until revenues turn around. Our target price of INR400 discounts FY17E EPS by
10x. We maintain our Neutral rating on the stock.
Ashish Chopra
(Ashish.Chopra@MotilalOswal.com); +91 22 3982 5424
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Mphasis
Three-year objectives—to grow Direct business…
… with overall company EBIT margin of 14-16%
MPHL has laid out its broad three-year objectives for FY16-18 and its entire efforts
will be channelized toward achieving these goals:
Grow Direct International revenues faster than the market.
The company has
partially addressed the challenges in Digital Risk through three course
corrections: [1] Change in delivery processes and methodologies to make it
more amenable to scale, [2] institute a more structured go-to-market, and [3] a
robust portfolio to make a case for customers to shift and allocate more in-
house work to Digital Risk.
Increase quality of revenues:
GRC (Governance, Risk and Compliance), Digital
and Next Generation services to constitute more than 50% of Direct
International revenues (v/s 36% currently)
Exhibit 1: TCV of deals in focus areas was higher
Direct channel TCV break-up (%)
Others, 34
GRC, 29
Others, 64
Digital, 7
Digital, 10
Source: Company, MOSL
Source: Company, MOSL
Exhibit 2: Deal TCVs in focus areas was higher
Direct channel Revenue break-up (%)
GRC, 56
Optimize service segments to conserve leadership bandwidth and
enhance
profitability. If segments/businesses such as Direct Emerging consume too much
bandwidth, the company will stay away from the same.
Be known as a path-breaking, progressive, innovative, next generation company.
Deliver
14-16% EBIT margin.
Average EBIT margin of mid-sized IT companies is
16.2%.
EBIT Margin (%)
16.5
18.6
16.0
S&M as % of Sales
Exhibit 3: Taking EBIT margin back to the 14-16% band
17.6
16.2 16.7
15.5 14.7 15.8 15.3 15.0 15.1 14.8
14.7 15.0
13.0 13.0 12.5
7.9
5.2 5.9
6.4 5.9
5.2 5.4 5.9 6.0 4.9 5.1 5.1 6.0
5.2
4.1 3.9 5.0 4.9
Source: Company, MOSL
18 June 2014
2

Mphasis
Focus on ~60% of the business
Direct International and Products segment will be the key growth drivers
MPHL is focused on growing Direct International business, which is 55% of
revenues—GRC’s share at ~29% and Digital’s 7%. Investment in digital
capabilities is paying off—TCV of USD270m in FY15 was the best in five years.
Though MPHL had anticipated the demand from Digital, it had underestimated
its intensity.
The other segment is Wyde and Eldorado (products), which accounts for a mere
4%. MPHL conceded that its decision to have a leader focusing on these product
units along with other services segments was a mistake; the company has
changed that and the last six months have seen significant improvement in the
performance of these segments. Revenue and profitability at Wyde have picked
up .
Decline in HP channel revenue is likely to continue in the foreseeable future and
the effort remains on stabilizing its operations. Given that the segment
contributes 34% to the company’s revenues, the weakness will hurt the overall
growth numbers. Even the 7% Direct emerging business is in a “Fix” mode for
now.
Exhibit 4: Focus on growing Direct International and Product segments (~60% of revenues)
Revenue break-up (%)
Wyde and Direct Emerging, 7
Eldorado, 4
Direct
International, 55
HP Channel, 34
Source: Company, MOSL
MPHL is currently running Direct business and HP channel as two separate
companies, with all the bandwidth invested in growing the Direct International
business. It expects the segment to support the company’s entire shareholder value
in the years to come. Though mortgage originations in the US pose a risk to MPHL’s
Digital Risk business within the Direct, the company stated that it does not expect
the originations to go down further. Despite the continued fall in the HP channel,
MPHL is not doing margin-dilutive work with HP.
18 June 2014
3

Mphasis
Specializing in Banking, Capital markets and Insurance…
…through offerings in GRC and Digital
Contrasting trends in services spending …
Over CY14-18, traditional services (72% of spending) are likely to decline at a CAGR
of 4%. On the other hand, Emerging services (28% of spend) are expected to post a
CAGR of 18%.
Exhibit 5: Digital ranks at the top of world’s largest
insurers…
% on initiatives - World's largest insurers
Others
Channel management
Risk management
Portals
Legacy modernization
Digital
6
6
10
13
47
Source: Gartner, Company
IT platform
IT Infra
Digital
11
16
54
18
Exhibit 6: … and also for the top-25 banks
% on initiative - top-25 global banks
Others
Payment services
8
11
Exhibit 7: Mix of spend expected to witness a rapid shift toward Emerging services
Traditional services
395
375
Emerging services
360
210
345
245
150
180
CY15
CY16
CY17
CY18
Source: Forrester
…and huge penalties paid by large financial institutions in recent years…
Fines/Penalties/Settlements by global financial institutions increased to USD57.5b in
CY14 and USD52b in CY13 from USD2b in CY09. Risk-related IT spending is expected
to touch USD98b by 2018.
Exhibit 8: Surge in fines paid by global financial institutions
Fines | penalties | settlements bu global FIs (USD b)
52.1
32.1
57.5
0.2
CY08
2
CY09
3.3
CY10
3.7
CY11
CY12
CY13
CY14
Source: Financial Times, Jan 2015
18 June 2014
4

Mphasis
… drive the focus on GRC and Digital
MPHL is focused on Banking & Capital Markets (BCM) and Insurance businesses.
Digital features as the top priority for most clients’ IT initiatives in both the
verticals—47% of the world’s largest insurers and 54% of the top-25 banks.
Therefore, MPHL is focused on Digital within BCM & Insurance.
Going slow on the inorganic route
Despite excess cash on the Balance Sheet, MPHL is going slow on the inorganic route
for now and has not deployed any aggressive M&A team at present. It believes that
the valuations for next-gen start-ups are overboard in many cases, and it would
prefer the dust to settle down. Also, given the new initiatives that the company has
announced, these will consume sufficient bandwidth of the organization’s top brass
for the foreseeable period.
18 June 2014
5

Mphasis
Chasing key success factors in the “VUCA” age
Agility, innovation and specialization to be at the core
FY15 was a strong year in terms of deal wins, with USD270m of TCV—among the
best wins the company has had in a few years. MPHL had articulated its focus areas
of Banking & Insurance, and Governance, Risk and Compliance (GRC) within that.
The other focus area is Digital; 66% of the deals won in FY15 were in GRC and
Digital. From a vertical standpoint, 90% of the wins came in Banking and Capital
Markets (BCM) and Insurance. MPHL characterized the ongoing environment as
“VUCA”—Volatile, uncertain, complex and ambiguous. In such a scenario, the
company has outlined the following critical success factors:
High clock speed:
The rate at which customers have to keep changing has gone
up, in order to stay relevant in the market with technology-led new models
changing the game more frequently. This necessitates faster time-to-market of
MPHL’s solutions, with agile approach to innovation. Even if some experiments
fail, it is better off failing fast. One of the measures to ensure the same is to
make the delivery head reside at customer’s location rather than offshore.
Continuous disruptive innovation:
Innovation will have to be an ongoing
process, given the rate of change. Towards that end, MPHL launched Mphasis
Labs three months back; the lab will focus on disruptive technologies in the
Digital world by creating platforms. It has defined some measures around which
ones to adopt: [1] Every team gets a maximum of four months to come up with
something new; [2] if the solution doesn’t work with even one of the 16 priority
clients, it is shelved. This necessitates a culture of co-creation and co-innovation.
It has launched Cart-up, which is Corporate supported start-up. MPHL
contributes with initial round of funding, and the second round happens only
after demonstration of a successful pilot.
High-value specialization:
Given the mid-sized company that MPHL is, it cannot
compete with bigger players across all segments. If the company does not
specialize, it stands to lose out to small innovative start-ups. As a result, it is
keen to take the approach of real specialization rather than taking the middle-
of-the-road path.
Exhibit 9: Incremental revenues have come from BCM & Insurance
BFSI
Others
28.0
14.0
9.9
9.9
FY12
FY15
Source: Company, MOSL
Brand building:
MPHL’s brand is relatively unknown; to be successful, it is
looking at competing in front of the customer rather than competing with the
market.
6
18 June 2014

Mphasis
Valuation view
HP channel to continue to weigh on financial performance
Our FY17 revenue estimate stands at USD1,035m compared with FY13 (YE
October) annual revenues of USD1,025m. Digital Risk acquisition, which was
expected to drive potential turnaround, has been one of the key headwinds
following the slump in US mortgage industry.
Net cash at MPHL is INR104/share, or 27% of the company’s market cap, and is
seeing steady accumulation across quarters. We estimate this to increase to
INR150/share by FY17, or 40% of current valuation; this, along with payout
policy of 50% (which implies dividend yield of 5% in FY17 and 4.2% in FY15), will
remain as key support to valuations.
We estimate MPHL to stem the decline in revenues and post a CAGR of 4.7%
over FY15-17E. Our EPS CAGR during this period is 9.6%. While valuations at
10.6x/9.6x FY16E/17E are at a discount to peers (particularly after factoring the
Cash Balance), sluggishness in the HP channel and mortgage originations in the
US continue to pose challenges to its Digital Risk business.
Revenue growth confidence would be the single most important factor to
change our stance on the stock because margins also will not rebound until
revenues turn around. Our target price of INR400 discounts FY17E EPS by 10x.
We maintain our Neutral rating on the stock.
Key Triggers
Turnaround in Digital Risk
Stemming the decline in HP Channel
Pick-up in TCV of quarterly deals
Key Risks
Continued volatility in Direct Channel Emerging markets
Failure to grow Mature market Direct channel at 1.5x industry growth
Pricing and margin negatives in pursuit of growth outside the HP channel
Exhibit 10: MPHIL 1-year forward PE
PE (x)
53
41
29
17
5
6.4
15.8
9.9
Peak(x)
Avg(x)
Min(x)
48.2
8.0
4.0
0.0
3.6
1.5
1.5
Exhibit 11: MPHIL 1-year forward PB
12.0
PB (x)
Peak(x)
Avg(x)
9.8
Min(x)
18 June 2014
7

Mphasis
Story in charts
Exhibit 12: HP Revenues have been declining rapidly…
HP Revenues
-5.9
65.9
56.5
44.4
36.8
34.5
% Change
Exhibit 13: … Now compounded with volatility in digital risk
Direct Channel (%)
HP Channel (%)
-13.8
-17.0
-19.9
-22.4
777
FY10
731
FY11
586
FY12
455
FY13
157
5MFY14
325
FY15
34.1
FY11
43.5
55.6
63.2
65.5
FY12
FY13
5MFY14
FY15
5MFY14* comparison normalized to be comparable
Exhibit 14: Exit from India Gov. business compounded
the decline…
India Revenue
18.6
-6.5
-28.9
1,229
-19.5
989
925
1,097
876
19.8
3.4
-10.4
% Change
21.4
-1.1
Exhibit 15: … Resulting in EPS decline in the last few years
12.5
EPS
% Change
-4.8
-19.0
-5.8
-0.1
-8.6
14.7
32.3
1,359 1,218 1,479 1,462
43.2
48.6
39.4
37.5
35.3
5MFY14* comparison normalized to be comparable
Exhibit 16: Incremental S&M spend will limit
margin expansion
EBIT Margin (%)
5.4
4.2
4.4
4.6
5.2
S&M (%)
6.1
6.2
Exhibit 17: Digital Risk revenues declined on low
originations in mortgage industry
Digital Risk Rev. (USD m)
42.5
34.2
46.3
45.5
38.0
29.6
34.0
22.4
30.8
21.7
FY09
20.6
FY10
16.4
FY11
16.4
FY12
15.3
FY13
15.2
5MFY14
13.3
FY15
Apr 13 Jul 13 Oct 13 Jan 14
2M Jun 14 Sep 14 Dec 14 Mar 15
Mar 14
Source: Company, MOSL
18 June 2014
8

Mphasis
Exhibit 18: Operating Metrics
Operating Metrics
Vertical Contribution (%)
Banking and Capital Markets
Insurance
IT, Commn & Entmt
Emerging Industries
Total
Revenue by Project Type (%)
TTM
FPP
Revenue by Delivery Location (%)
Onsite
Offshore
Secondary Market Segment (%)
HP Channel
Mature Market - Direct Channel
Emerging Market - Direct Channel
Service Type (%)
App Maintenance
App Development
Customer Service
Service/Technical Help Desk
Trasaction Processing Service
Infra Management Services
Knowledge Processes
License Income
CLIENT METRICS
Client wins
BCM
Insurance
ITCE
Emerging industries
Total
Client wins Channels
Direct Channel
HP Channel
Total Client additions
Clients Contributing More than:
USD1m
USD5m
USD10m
USD20m
Clients - Direct Channel
USD1m
USD5m
USD10m
USD20m
Clients - HP Channel
USD1m
USD5m
USD10m
USD20m
Jul-12 Oct-12 Jan-13 Apr-13
25.9
11.5
26.8
35.8
100
86
14
32
68
55
33
12
33
26
5
4
5
25
1
1
26.2
11.9
26.1
35.7
100
86
14
33
67
54
35
11
33
26
6
4
6
25
1
1
24.7
12.0
24.8
38.5
100
86
14
31
69
52
36
12
33
24
6
4
5
27
1
1
35.9
11.6
21.0
31.5
100
89
11
42
58
46
47
7
31
21
5
3
5
20
14
1
Jul-13 Oct-13 Jan-14 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
39.7
11.5
17.8
31.0
100
87
13
45
55
41
54
5
31
22
5
3
5
17
17
0
41.8
12.1
16.2
29.9
100
86
14
47
53
40
56
4
31
22
5
3
5
16
18
1
41.4
12.9
16.1
29.7
100
87
13
47
53
37
57
5
29
20
5
3
5
18
18
1
41.5
12.1
16.3
30.1
100
86
14
46
54
36
57
7
26
23
5
3
5
19
18
0
40.7
12.8
16.8
29.7
100
87
13
45
55
36
56
8
28
22
5
3
5
20
16
0
41.9
13.4
16.9
27.8
100
86
14
46
54
36
58
7
29
24
6
3
6
18
15
0
39.6
14.9
16.9
28.6
100
83
17
43
57
35
56
9
29
25
6
2
7
20
11
1
41.8
15.3
15.6
27.3
100
86
14
47
53
31
60
9
29
25
6
2
7
17
14
1
7
1
8
8
24
20
4
24
129
41
24
10
52
14
10
5
77
27
14
5
7
2
6
7
22
14
8
22
130
39
25
9
56
15
10
5
74
24
15
4
3
2
3
14
22
14
8
22
126
40
23
9
55
15
9
5
71
25
14
4
6
3
4
8
21
10
11
21
128
42
22
9
62
19
10
6
66
23
12
3
4
1
3
8
16
10
6
16
122
44
22
10
58
20
12
7
64
24
10
3
3
4
1
9
17
8
9
17
117
41
21
11
59
20
12
8
58
21
9
3
2
3
0
6
11
10
1
11
110
42
20
11
54
21
12
7
56
21
8
4
2
0
2
4
8
4
4
8
112
43
19
11
57
25
13
8
55
18
6
3
9
1
1
5
16
11
5
16
110
42
17
10
57
25
12
7
53
17
5
3
1
0
2
7
10
5
5
10
104
41
17
10
52
25
12
7
2
0
0
1
3
3
0
3
100
42
17
8
49
25
12
6
4
1
2
5
12
8
4
12
102
39
19
9
57
25
14
7
52
51
45
16
17
14
5
12
5
3
2
2
Source: MOSL, Company
18 June 2014
9

Mphasis
Exhibit 19: Operating Metrics
Operating Metrics
Vertical Contribution (%)
Banking and Capital Markets
Insurance
IT, Commn & Entmt
Emerging Industries
Total
Revenue by Project Type (%)
TTM
FPP
Revenue by Delivery Location (%)
Onsite
Offshore
Secondary Market Segment (%)
HP Channel
Mature Market - Direct Channel
Emerging Market - Direct Channel
Service Type (%)
App Maintenance
App Development
Customer Service
Service/Technical Help Desk
Trasaction Processing Service
Infra Management Services
Knowledge Processes
License Income
CLIENT METRICS
Client wins
BCM
Insurance
ITCE
Emerging industries
Total
Client wins Channels
Direct Channel
HP Channel
Total Client additions
Clients Contributing More than:
USD1m
USD5m
USD10m
USD20m
Clients - Direct Channel
USD1m
USD5m
USD10m
USD20m
Clients - HP Channel
USD1m
USD5m
USD10m
USD20m
Jul-12 Oct-12 Jan-13 Apr-13
25.9
11.5
26.8
35.8
100
86
14
32
68
55
33
12
33
26
5
4
5
25
1
1
26.2
11.9
26.1
35.7
100
86
14
33
67
54
35
11
33
26
6
4
6
25
1
1
24.7
12.0
24.8
38.5
100
86
14
31
69
52
36
12
33
24
6
4
5
27
1
1
35.9
11.6
21.0
31.5
100
89
11
42
58
46
47
7
31
21
5
3
5
20
14
1
Jul-13 Oct-13 Jan-14 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
39.7
11.5
17.8
31.0
100
87
13
45
55
41
54
5
31
22
5
3
5
17
17
0
41.8
12.1
16.2
29.9
100
86
14
47
53
40
56
4
31
22
5
3
5
16
18
1
41.4
12.9
16.1
29.7
100
87
13
47
53
37
57
5
29
20
5
3
5
18
18
1
41.5
12.1
16.3
30.1
100
86
14
46
54
36
57
7
26
23
5
3
5
19
18
0
40.7
12.8
16.8
29.7
100
87
13
45
55
36
56
8
28
22
5
3
5
20
16
0
41.9
13.4
16.9
27.8
100
86
14
46
54
36
58
7
29
24
6
3
6
18
15
0
39.6
14.9
16.9
28.6
100
83
17
43
57
35
56
9
29
25
6
2
7
20
11
1
41.8
15.3
15.6
27.3
100
86
14
47
53
31
60
9
29
25
6
2
7
17
14
1
7
1
8
8
24
20
4
24
129
41
24
10
52
14
10
5
77
27
14
5
7
2
6
7
22
14
8
22
130
39
25
9
56
15
10
5
74
24
15
4
3
2
3
14
22
14
8
22
126
40
23
9
55
15
9
5
71
25
14
4
6
3
4
8
21
10
11
21
128
42
22
9
62
19
10
6
66
23
12
3
4
1
3
8
16
10
6
16
122
44
22
10
58
20
12
7
64
24
10
3
3
4
1
9
17
8
9
17
117
41
21
11
59
20
12
8
58
21
9
3
2
3
0
6
11
10
1
11
110
42
20
11
54
21
12
7
56
21
8
4
2
0
2
4
8
4
4
8
112
43
19
11
57
25
13
8
55
18
6
3
9
1
1
5
16
11
5
16
110
42
17
10
57
25
12
7
53
17
5
3
1
0
2
7
10
5
5
10
104
41
17
10
52
25
12
7
2
0
0
1
3
3
0
3
100
42
17
8
49
25
12
6
4
1
2
5
12
8
4
12
102
39
19
9
57
25
14
7
52
51
45
16
17
14
5
12
5
3
2
2
Source: MOSL, Company
18 June 2014
10

Mphasis
Financials and valuations
Key Assumptions
Y/E March
INR/USD Rate
Revenues (USD m)
Total Delivery Headcount
Net Addition
Per Capita Productivity (USD)
HP Channel Revenue (%)
Direct Channel Revenue (%)
Oct 10
45.8
1,104
39,962
5,330
27,630
71.2
28.8
Oct 11
45.7
1,117
40,408
446
27,646
65.9
34.1
Oct 12
53.0
1,036
36,640
-3,768
28,284
56.5
43.5
Oct 13
57.5
1,025
37,052
412
27,655
44.4
55.6
5ME
Mar 14
58.7
427
35,663
-1,389
11,965
36.8
63.2
Mar 15
61.3
944
34,059
-1,604
27,716
34.5
65.5
Mar 16E
63.0
967
34,769
710
27,804
27.6
72.4
Mar 17E
64.0
1,035
37,109
2,340
27,900
23.4
76.6
Income Statement
Y/E
Revenues
Change (%)
Cost Of Goods Sold
SG&A Expenses
EBITDA
% of Net Sales
Depreciation
Other Income
PBT
Tax
Rate (%)
PAT
Net Income
Change (%)
Oct 10
50,366
18.1
33,749
4,607
12,010
23.8
1,638
1,089
11,461
1,192
10.4
10,269
10,269
13.0
Oct 11
50,980
1.2
36,741
4,305
9,934
19.5
1,550
1,751
10,135
1,827
18.0
8,308
8,308
-19.1
Oct 12
53,574
5.1
38,133
4,930
10,511
19.6
1,745
1,513
10,279
2,357
22.9
7,922
7,922
-4.6
Oct 13
57,963
8.2
41,958
5,670
10,335
17.8
1,446
1,062
9,951
2,514
25.3
7,437
7,437
-6.1
5ME
Mar 14
25,939
7.4
18,600
2,942
4,397
17.0
504
389
4,282
1,191
27.8
3,091
3,091
-0.3
Mar 15
57,949
-6.9
42,540
6,708
8,701
15.0
980
1,687
9,408
2,630
28.0
6,778
6,778
-8.6
(INR Million)
Mar 16E
60,975
5.2
44,972
6,554
9,449
15.5
944
1,848
10,353
2,795
27.0
7,558
7,558
11.5
Mar 17E
66,105
8.4
48,661
7,090
10,354
15.7
977
1,786
11,163
3,014
27.0
8,149
8,149
7.8
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 & Bank Balance
Loans & Advances
Current Liab. & Prov
Net Current Assets
Application of Funds
E: MOSL Estimates
18 June 2014
Oct 10
2,099
30,892
32,991
456
33,448
10,258
7,836
2,423
89
3,886
14,600
754
23,286
12,054
1,786
9,446
11,590
11,696
33,445
Oct 11
2,100
36,898
38,998
2,946
41,944
11,339
8,495
2,844
102
8,698
17,765
975
25,610
13,072
2,897
9,641
14,050
11,560
41,944
Oct 12
2,101
41,946
44,047
3,299
47,346
11,401
9,041
2,360
150
9,612
25,192
1,015
22,970
12,102
4,216
6,652
13,953
9,017
47,346
Oct 13
2,101
47,243
49,344
5,600
54,944
10,892
8,770
2,122
266
22,499
18,995
1,015
26,060
12,582
5,943
7,535
16,013
10,047
54,944
5ME
Mar 14
2,101
49,049
51,150
5,555
56,705
10,912
8,734
2,178
62
21,865
18,154
968
26,522
12,967
4,700
8,855
13,044
13,478
56,705
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
(INR Million)
Mar 16E
2,101
55,529
57,630
4,551
62,181
10,855
9,443
1,412
318
21,781
14,431
826
41,906
13,767
17,807
10,332
18,493
23,413
62,181
Mar 17E
2,101
58,636
60,737
3,003
63,740
11,655
10,420
1,235
318
21,781
14,431
826
45,089
14,899
19,859
10,332
19,940
25,149
63,740
11

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*
Turnover Ratios
Debtors (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity Ratio(x)
Oct 10
48.6
56.7
157.2
3.5
7.2
7.8
6.7
5.3
1.3
2.4
0.9
36.4
36.4
77
18.0
0.0
Oct 11
39.3
46.9
185.7
6.5
16.5
9.6
8.1
6.2
1.2
2.0
1.7
23.1
22.2
90
19.4
0.1
Oct 12
37.5
46.0
209.6
17.0
45.3
10.1
8.2
5.1
1.0
1.8
4.5
19.1
19.6
86
20.6
0.1
Oct 13
35.3
42.3
234.9
17.0
48.1
10.7
8.9
5.8
1.0
1.6
4.5
15.9
17.4
78
25.9
0.1
5ME
Mar 14
14.7
17.1
243.5
7.0
47.6
10.7
9.2
5.9
1.0
1.6
4.4
14.8
16.7
74
29.0
0.1
Mar 15
32.3
36.9
260.8
16.0
49.6
11.7
10.2
6.7
1.0
1.4
4.2
12.8
13.1
77
31.0
0.1
Mar 16E
36.0
40.5
274.3
18.8
52.1
10.5
9.3
5.5
0.8
1.4
5.0
13.4
13.8
75
41.1
0.1
Mar 17E
38.8
43.4
289.1
20.0
51.6
9.7
8.7
4.6
0.7
1.3
5.3
13.8
14.9
79
49.9
0.0
Cash Flow Statement
Y/E
Oct 10
CF from Operations
11,848
Chg. in Wkg. Capital
-2,757
Net Operating CF
9,091
Net Purchase of FA
-858
Free Cash Flow
8,233
Net Purchase of Invest.
-7,929
Net Cash from Invest.
-8,787
Proceeds from equity
127
Proceeds from LTB/STB
422
Dividend Payments
-858
Net CF from Financing
-310
Free Cash Flow
8,233
Net Cash Flow
-6
Opening Cash Balance
1,792
Add: Net Cash
-6
Closing Cash Balance
1,786
E: MOSL Estimates; *Annualized values for 5m FY14E
Oct 11
9,637
1,247
10,884
-1,985
8,899
-7,976
-9,961
-704
2,490
-1,598
188
8,899
1,111
1,786
1,111
2,897
Oct 12
9,627
3,862
13,489
-1,309
12,180
-8,341
-9,650
1,307
353
-4,180
-2,520
12,180
1,319
2,897
1,319
4,216
Oct 13
8,883
697
9,580
-1,324
8,256
-6,690
-8,014
2,040
2,301
-4,180
161
8,256
1,727
4,216
1,727
5,943
5ME
Mar 14
3,642
-4,674
-1,032
-356
-1,388
1,475
1,119
436
-45
-1,721
-1,330
-1,388
-1,243
5,943
-1,243
4,700
Mar 15
7,900
-50
7,850
-614
7,236
3,807
3,193
903
698
-4,033
-2,432
7,236
8,611
4,700
8,611
13,311
(INR Million)
Mar 16E
8,502
3,222
11,724
-800
10,924
0
-800
0
-1,702
-4,727
-6,429
10,924
4,495
13,311
4,495
17,806
Mar 17E
9,126
315
9,441
-800
8,641
0
-800
0
-1,548
-5,042
-6,590
8,641
2,051
17,806
2,051
19,857
18 June 2014
12

Mphasis
NOTES
18 June 2014
13

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14