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Nirmal Bang Report
Mphasis Ltd.'s Q4 FY24 revenue grew QoQ in constant currency term by 2.1% but was lower than our expectation of 3%. Reported margin too fell short of our expectation due to acquisition related costs. FY24 revenue came at $1.61 billion a decline of 6.5% on YoY CC terms.
While no numerical guidance was given for FY25, the management says that FY25 is going to be a growth year and that it would deliver a slightly higher than industry growth which it thinks will be in mid-single digits. It stated that the improvement in growth is not market driven but by in account action including infusion of Tech and Artificial intelligence into solutions.
Both the banking, financial services (non-mortgage) and the TMT segments which drove growth in Q4 FY24 QoQ will be drivers in H1 FY25 too. The mortgage related business, which had seen significant pressure in FY23, is expected to be stable.
It provided an Ebit margin (reported) guidance for FY25 of 14.6% to 16%. Adjusted for acquisition related costs, this would be 15.7%-17.1%.
It spoke of a return of short cycle projects which may be a precursor of return of discretionary spending (according to it). This commentary is quite different from what we have been hearing from other companies that have reported thus far in Q4 FY24. It indicated visibility on QoQ growth in H1 FY25.
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