Shares of Mphasis are up marginally, even after Jefferies cutting target price on the counter on the back of the company's third-quarter earnings for the financial year ending March 2026.
In its latest note, Jefferies maintained its' buy' call on Mphasis but slightly lowered its price target from Rs 3,460 to Rs 3,410. This comes on the back of the IT firm reporting its Q3 earnings, where revenues met analyst expectations while normalised profits came in slightly ahead of estimates.
For the December quarter, Mphasis reported consolidated revenue of Rs 4,004 crore, accounting for a 2.6% sequential increase, while net profit declined 5.7% to Rs 442 crore. The bottom line was impacted by a one-time provision of approximately Rs 35 crore related to the new Labour Codes regulation.
In light of Q3 earnings, Jefferies noted that the company is well-positioned to see a pickup in growth to a 10% year-on-year CAGR over FY26 to FY28, adding that the IT firm is seeing a strong deal pipeline and healthy growth outlook within the BFSI vertical, the company's largest revenue contributor.
During the December quarter, Mphasis also secured new deal wins with a total contract value of $428 million, with the management emphasising that approximately 62% of these new deals are AI-led.
While Jefferies largely noted that Mphasis results were positive, it reduced its earnings per share estimates by up to 1.5% for the FY26-FY28 period. As mentioned earlier, the firm had also cut the target price, citing rising interest expenses, although the brokerage still expects a 14% earnings per share CAGR for Mphasis over the next three fiscal years.
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