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: The consolidated numbers - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Dec 11, 2001

    Mphasis: The consolidated numbers

    Mphasis’s 2QFY02 performance was superior to many of its peers based on the numbers of the Indian entity. Though topline growth was moderate, the company managed to improve its operating margins significantly. However, a look at the group’s consolidated numbers reveals a very different picture.

    According to the numbers based on Indian GAAP, the operating margins for the company declined quite sharply in 2QFY02. This was due to the fact that growth in cost of revenues and the SGA expenses outpaced revenue growth. A sum of Rs 14 m that was provided for e-structuring of skills was written back and was offset against the expenditure for the 2QFY02. If this write back were eliminated the operating margins for the company would have been 8.9% in 2QFY02 compared to 13.2% in 1QFY02.

    The company posted 65% sequential growth in the bottomline. This was including a one time write off of Rs 24 m towards restructuring costs relating to its European business including the closure of the healthcare product line. However, during 2QFY02 Mphasis has not provided for depreciation. Also, the other income figure has jumped by 140%. If the depreciation and other income figures were same as in 1QFY02 and the restructuring cost was eliminated, the company’s net figure would have shown a dip. The deprecation figure may be included in the SGA expenses but this has not been mentioned separately.

    (Rs m) 1QFY02 2QFY02 Change
    Sales 723 763 5.5%
    Other Income 12 29 140.1%
    Expenditure 628 684 8.9%
    Operating Profit (EBDIT) 96 79 -17.2%
    Operating Profit Margin (%) 13.2% 10.4%  
    Interest 3 (7) -313.0%
    Depreciation 48 - -100.0%
    Profit before Tax 56 115 104.2%
    Extra-ordinary item - (24)  
    Tax 2 0 -74.7%
    Profit after Tax/(Loss) 54 90 65.4%
    Net profit margin (%) 7.5% 11.8%  
    Diluted number of shares 15.8 15.8  
    Diluted Earnings per share* 13.8 22.8  
    P/E 19.6 11.9  

    The only positive aspect of the company’s performance was a strong topline growth, which was 5.5% sequentially. The company’s topline growth was powered by the growth of MsourceE, the Group call center subsidiary. MsourceE posted a strong sequential growth of 36% to clock revenues of Rs 54 m in 2QFY02. Excluding the revenues from MsourceE the revenues would have grown by 3.7% on a sequential basis.

    On a YoY basis, the company’s revenues grew by 12.5% and the net profit jumped by 512%. The company managed to post an operational profit of Rs 79 m as compared to a loss of Rs 31 m in 2QFY01. While the company’s revenues have grown very sharply, it has managed to control its expenditure. Infact on a YoY basis the company’s expenditure declined by 3.5%. The Indian entity contributes 56% to the group’s revenues. While the operating profit for the Indian entity was Rs 125 m in 2QFY02, the figure was Rs 79 m for the consolidated entity. This could point to the fact that other divisions of the company are not making operational profits.

    At the current market price the stock is trading at a P/E multiple of 12 times in 2QFY02 annualised earnings. While the company has managed to clock a very strong performance in terms of topline, Mphasis has to clearly look at its internal processes, considering the fact company’s expenses have taken a toll on its operating margins.



    Equitymaster requests your view! Post a comment on "Mphasis: The consolidated numbers". 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 21, 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