Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Mphasis: Good show - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 16, 2001

    Mphasis: Good show

    Mphasis-BFL has posted a 2% sequential growth in revenues and a significant 54% growth in net profits (QoQ) for 2QFY02. The stellar growth in profits is due to a large other income component. However, the most positive aspect of the result is that the company has significantly increased its operating margins. The operating margins have jumped from 23.4% in 1QFY02 to 29.1% in 2QFY02.

    On a YoY basis the company’s topline has grown by 7% and the bottomline has jumped by 175%. The steep rise in bottomline is due to a significant increase in operating margins, which was in the region of 17% in 2QFY01.

    While the company has reported total expenditure for the quarter at Rs 305 m, the break up is Rs 265 m for software development expenses and Rs 52 m for administration. This two heads add up to Rs 317 m. However, Mphasis has written back Rs 14 m against a provision for e-structuring. Excluding the write back the company’s operating margins would have been 25%.

    (Rs m) 1QFY02 2QFY02 Change
    Sales 422 430 1.8%
    Other Income 9 21 133.4%
    Expenditure 324 305 -5.9%
    Operating Profit (EBDIT) 99 125 26.8%
    Operating Profit Margin (%) 23.4% 29.1% -
    Interest 1 1 -39.3%
    Depreciation 31 31 0.2%
    Profit before Tax 75 115 51.7%
    Tax 1 0 -65.9%
    Profit after Tax/(Loss) 74 114 53.9%
    Net profit margin (%) 17.6% 26.5% -
    Diluted number of shares 15.8 15.8 -
    Diluted Earnings per share* 18.8 28.9 53.9%
    P/E - 3.0 -
    *(annualised) - - -

    Mphasis had earlier kept aside an amount of Rs 28 m for re-skilling its employees. Of this, it spent Rs 14 m for this purpose in 1HFY02. The company feels that it has accomplished what it set out to do in this area and therefore, will not require the remaining amount (Rs 14 m), which has been written back in the current quarter. However, the move could be on the back of a tough economic environment. All companies are cutting down on their costs, and training is one of the areas that have been the first to take a hit. Also, as client focus their IT spending on mission critical activities like maintenance, demand for new skill sets has taken a backseat. Therefore, companies can afford to delay training in these areas.

    The company has also managed to cut corners. The software development expenses have shown a 5% decline sequentially. As a percentage of revenues the software development expenses have come down from 65% in 1QFY02 to 62% in 2QFY02.

    Mpahsis’ performance is undoubtedly a good one. The stock is likely to see some upside to its valuations on the back of this performance. However, September 11 tragedies are likely to be felt in the third and the fourth quarter of FY02. Consequently, the markets are likely to be cautious, which will limit the upside. At the current market price of Rs 86, the stock is trading at a P/E multiple of 3 times its 2QFY02 annualised earnings.



    Equitymaster requests your view! Post a comment on "Mphasis: Good show". Click here!


    More Views on News

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    TCS: Currency Volatility Plays Spoilsport (Quarterly Results Update - Detailed)

    Jul 14, 2017

    TCS starts FY18 decently despite an adverse currency impact.

    HCL Tech: Ends FY17 on Expected Lines (Quarterly Results Update - Detailed)

    Jun 29, 2017

    Volvo partnership caps a good year for HCL Technologies.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)


    • Track your investment in MPHASIS LTD with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Compare Company With Charts