The IT stocks are amongst the resilient counters today – The Mphasis share price was up 1% in a falling market. The brokerage firm Nuvama believes that the stock as room to move up even higher.
The brokerage house has set a target price of Rs 3,200 to the stock. This translates to an upside potential of around 42%.
According to the brokerage report, the company has started translating its deal pipeline into actual revenue growth, which is a key trigger for future performance.
Let’s take a look at the key reason why the brokerage is bullish on the stock and what is the rationale behind it –
Nuvama on Mphasis: Revenue momentum
One of the key takeaways, as per the brokerage report, is that Mphasis has delivered growth on the revenue front after three quarters of strong deal wins.
Nuvama in its report noted, “After three quarters of strong deal-wins, Mphasis finally delivered on revenue front with solid QoQ/YoY growth.”
The brokerage highlighted that a strong exit rate in the financial year 2026, along with record deal wins, creates a base for faster growth ahead.
“Strong exit-rate and record deal-wins in FY26 offer a perfect platform to accelerate in FY27,” added the brokerage report.
Nuvama on Mphasis: What is driving growth?
According to the Nuvama report, the company’s growth is being supported by its direct business segment.
The Banking, Financial Services and Insurance (BFSI) segment continues to be the biggest contributor. Growth in banking and insurance businesses has remained strong. This is driven by better execution and increased spending by clients.
At the same time, demand for artificial intelligence (AI)-led transformation is playing a major role. Companies are increasingly investing in automation and digital upgrades, and Mphasis seems to be benefiting from this shift.
“AI adoption is scaling up across enterprises, moving from pilots to full-scale deployment,” added the brokerage house in its report.
However, not all segments are performing equally. The Technology, Media and Telecom (TMT) segment has seen some short-term weakness due to project completions and delays in decision-making.
Nuvama on Mphasis: Margins and profitability stay stable
According to the brokerage report, Mphasis has managed to maintain stable margins despite growth investments.
The company reported a slight improvement in Earnings Before Interest and Taxes (EBIT) margins during the quarter, while full-year margins remained steady.
Nuvama, in its report, added further, “Q4 EBIT margin expanded 20bp QoQ to 15.4% while FY26 margins remained stable at 15.3%, flat YoY.”
Nuvama on Mphasis: Strong deal pipeline
Another key positive highlighted by the brokerage is the company’s deal pipeline. According to the brokerage house report, “Deal-wins were decent at USD 407 million (-5% QoQ/+4% YoY) with 69% AI-led deals.”
Nuvama noted, “The pipeline remains strong (up 38% YoY; ~69% AI-led).”
Nuvama on Mphasis: Valuation and outlook ahead
Nuvama has slightly revised its estimates to factor in currency changes and business performance. The brokerage has also increased its earnings estimates for the coming years.
“We are tweaking FY27E/28E EPS by +2.9%/+3.4% as we update USD – INR assumption (93 from 88). Retain ‘Buy’ with a target price of Rs 3,200,” Nuvama noted.
Disclaimer: The investment analysis and target price mentioned above are based on a report by Nuvama and do not constitute a personal recommendation or a solicitation to buy or sell securities. As stock market investments involve significant risks, including potential volatility in the IT sector, readers should consult a SEBI-registered investment advisor before making any financial decisions. This information is provided for educational purposes only and should not be treated as professional financial advice.
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