This Mid Cap IT Company Stock Has Given Return Of 158.35% In 5-years, Should You Buy Now?

The stock price of Mphasis Limited has surged rapidly in five years. This mid cap IT stock shows potential to grow as per two brokerages. The company reported a weak quarter, based on that analysts of Anand Rathi and ICICI Direct have given their views in the brokerage reports published on 23rd January 2023. Check the details here.

Anand Rathi recommends to buy shares of Mphasis, with a target price of Rs 2820 per share

The analyst of Anand Rathi sees a growth of upto 39.6% return from the stock, if you invest in it. Yet the brokerage has report has mentioned that the analyst has cut down the estimates by approximately 4%. "In Q3, Mphasis undershot peers with its sequentially flattish IT services (82% of revenue). The weakness arose from furloughs and delayed rampups in deals won previously. It did well, however, in its key strengths such as TCV (net new $401m) and client mining (first client moving to the $200m bracket), keeping alive revenue-acceleration hopes. BPM (18% of revenue) reflected weakness in Mortgages (~50% of BPM) though industry volumes have started stabilising in the last 2 months. Margins are trending up; to retain pace as revenue growth returns and utilisation/offshore improve. The weak Q3 leads to our ~4% cut in estimates and 3% in the target. We expect Mphasis to start matching peers' growth rates from Q1 FY24, and value it at 25x FY25e EPS, on better portfolio mix resulting into lower volatility in performance. Our new price target is Rs.2,820 per share."

ICICI direct suggests a 'Hold' on the stock of Mphasis, with a price target of Rs 2070

As per the brokerage coverage report, "Mphasis' share price has grown by ~2.9x over the past five years from approximately Rs 710 in January 2018 to Rs 2025 levels in January 2023. We maintain our HOLD rating on the stock and value Mphasis at Rs 2070 i.e. 20x P/E on FY25E EPS." In the brokerage report, the key triggers for hold suggestion were mentioned. "Strategy to mine top 10, 20 clients, adding high potential new logos, rise in deal sizes & expansion in Europe bodes well for long term growth. Further, the management stability, improving deal size, market share gains via vendor consolidation, low legacy exposure to drive 8.5% CAGR in revenues over FY22-25E. Improving revenue trajectory, higher offshoring, pricing and automation to boost EBIT margins (+100 bps to 16.3% in FY22-25E)."

Share movement details

The last traded stock price of Mphasis was Rs 2209.25 per share, it was down by 1.51% over previous day. In one year the stock price has fallen by 28.97%, but in three years it has grown by 145.44% and in five years it has grown massively by 158.35%. Its 52-week high was at Rs 3466.40 per share and 52-week low was at Rs 1897.35 per share. 

Disclaimer

The stock has been picked from the brokerage reports of Anand Rathi and ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage houses are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.