'Buy' suggested for Mphasis stock

The analysts put a Buy rating on the stock with a target price of Rs 1,830 (20x PE on FY23E EPS). The earlier target price was Rs 1,600.

Mphasis reported a healthy set of Q3FY21 numbers. Revenues in dollar terms increased 2 per cent QoQ mainly led by 5.6 per cent QoQ growth in direct channel partially offset by 17.5 per cent QoQ decline in DXC channel. The company's EBIT margin increased by 30 bps QoQ to 16.4 per cent. In addition, the company has guided at margins of 15.5-16.5 per cent for FY21E, according to an analytical report by the ICIC Direct Research.

The company over the past few quarters has seen healthy deal win traction. This coupled with less exposure to impacted verticals, capability to mine clients effectively, market share gains via vendor consolidation, low legacy exposure, traction in Blackstone portfolio and healthy margins suggest that the investor should be positive on the stock.