At a Glance
Over 5 years, Mphasis delivered stock CAGR of 26% and earnings CAGR of 8%—a decent ride but underwhelming when compared to IT peers. With Blackstone still in charge and OPM stuck at 18–19%, is this a quietly compounding dark horse or a middling coder-for-hire?
🔄 TL;DR
- Stock CAGR: 26% in 5 years
- EPS CAGR: 7.7% from FY20 to FY25
- Revenue CAGR: 10%, profit CAGR 8%
- OPM: Stable at 18–19%
- P/E: 30x, P/B: 5.3x
- Promoter stake down: 55.7% → 40.1%
- Fair Value Range: ₹2250 – ₹2500
🌐 Background: From HP to Blackstone, Now?
- Started in 2000s, taken over by EDS, then HP, and now controlled by Blackstone
- Blackstone still holds 40.14% stake (Mar 2025)
- Focused on cloud, AI, and banking-tech segments
- Major clients in BFSI and retail; 80%+ revenue from the US
📊 Financials Snapshot (₹ in Cr)
| Year | Revenue | Net Profit | EPS (₹) | OPM % |
|---|---|---|---|---|
| FY20 | 8,844 | 1,185 | 63.52 | 19% |
| FY21 | 9,722 | 1,217 | 65.06 | 19% |
| FY22 | 11,961 | 1,431 | 76.19 | 18% |
| FY23 | 13,798 | 1,638 | 86.94 | 18% |
| FY24 | 13,279 | 1,555 | 82.27 | 18% |
| FY25 | 14,230 | 1,702 | 89.55 | 19% |
- EPS CAGR: 7.7%
- Revenue CAGR: 10%
- Flat OPM means linear bottom line
🧵 What’s Working:
- Healthy cash flows: ₹1,905 Cr from operations in FY25
- Consistent dividend payout >60%
- High-quality BFSI clientele
- Expanding into Latin America (new CoE in Argentina)
- Low attrition vs sector peers
⚡ What’s Not Working:
- Growth has slowed from 15%+ to single digits
- Sales CAGR of 6–10% trails peers like Persistent (24%) and LTIMindtree (18%)
- Client concentration risk: top 10 clients = 50% of revenue
- Margin stuck at 18–19% for 6 years
- Promoter holding (Blackstone) has steadily reduced
📊 Valuation vs Peers
| Company | P/E | OPM % | ROCE % | 5Y Sales CAGR |
| TCS | 26.2 | 25% | 64.6% | 11% |
| Infosys | 25.7 | 24% | 37.5% | 10% |
| HCL Tech | 27.0 | 22% | 31.9% | 10% |
| Persistent | 67.8 | 17% | 31.4% | 24% |
| LTIMindtree | 35.5 | 18% | 27.6% | 18% |
| Mphasis | 30.2 | 19% | 22.2% | 10% |
Verdict: Mphasis trades at a premium to TCS/Infosys despite slower growth and weaker ROCE.
📈 Fair Value Calculation (PEG Method)
- EPS FY25: ₹89.55
- Long-term EPS CAGR: ~8%
- PEG fair P/E: 1.5 × 8 = 12x (conservative), 18x (aggressive)
Fair Value Range = ₹89.55 × (25x to 28x) = ₹2,250 – ₹2,500
Current price: ₹2,693 = Premium zone
📆 Management & KMP
- CEO: Nitin Rakesh
- Known for: BFSI focus, expanding partnerships
- Strength: Margin preservation + delivery excellence
- Risk: No visible push into new tech like GenAI or digital platforms
✋ Final Verdict: Sleepy Compounder or Stale Story?
Mphasis isn’t broken, but it’s also not breaking out:
- Steady cash, low volatility
- Weak revenue growth, EPS stagnating
- Trading at optimistic multiples for 8% CAGR
It’s a safety-first IT play, but not a bargain at current price.
Tags: Mphasis, IT Stocks, EduInvesting, Blackstone, Nitin Rakesh, Cloud Tech, BFSI Clients, PE Ownership
✍️ Written by Prashant | 🗓️ June 18, 2025
