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.
Software: New realities - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Nov 28, 2002

    Software: New realities

    The September quarter results of software companies have thrown up new realities. While the top rung software companies have done well to protect their turf and grow at a better than expected rate. Second rung software companies have struggled. There have however been a few exceptions like Mphasis BFL that have performed better than expected.

    Of the total revenues, IT consulting and architecture contributes about 5% to Mphasis's revenues, while the contribution from the e-solutions space is about 40% to 45%. The remaining 50% to 55% comes from traditional business like development, support and maintenance. The company has a special focus on the on BFSI (banking, financial services and insurance), logistics & airlines verticals. To add pace to the topline growth, the company has also ventured into the IT enabled services segment with a subsidiary called MsourcE.

    In the IT enabled services segment the company’s offerings include call centers & business processes outsourcing (BPO). The company’s revenues from the call centre business, which is carried out by the subsidiary MsourcE, have shown rapid growth. The figure has grown from Rs 51m in FY01 to Rs 234 m in FY02. This amounts to a growth of almost 360%. The company expects MsourcE to break even by the end of fiscal FY02. Once the company breaks even the operating margins are likely to improve considerably.

    Having enumerated the positive aspects of the company’s prospects we must also point out the concerns. The biggest concern regarding the company is the low visibility in earnings. The management had given a guidance of revenues to the tune US$ 100 m in FY02. This translated to a 30% growth. However, due to the impact of the slowdown the management had to scale down its revenue guidance. The revenue growth was just about 14.6% for FY02. Infact revenues from the services business have shown a comparatively poor growth rate of 8% compared to the industry average of 22%.

    BFL has been dependent on a few large customers. The top 10 clients contribute 65% to the revenues. The company wants to keep the figure above 60%. FedEx contributes to more than 10% of its revenues and Compaq contributes around 7%. Any negatives in the relationship with either of these two clients could severely impact the company’s revenues. FedEx is the company’s only clients that bills over US$ 10 m. It would be very difficult for Mphasis to establish another relationship of a similar nature.

    For more detailed analysis with projections, view our complete research report on Mphasis BFL.



    Equitymaster requests your view! Post a comment on "Software: New realities". 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

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    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.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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 16, 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


    Detailed Financial Information With Charts