MPHASIS - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.0
| Stock Code | MPHASIS | Market Cap | 42,550 Cr. | Current Price | 2,230 ₹ | High / Low | 3,037 ₹ |
| Stock P/E | 29.8 | Book Value | 339 ₹ | Dividend Yield | 2.55 % | ROCE | 29.2 % |
| ROE | 22.4 % | Face Value | 10.0 ₹ | DMA 50 | 2,268 ₹ | DMA 200 | 2,512 ₹ |
| Chg in FII Hold | -0.28 % | Chg in DII Hold | 0.39 % | PAT Qtr | 372 Cr. | PAT Prev Qtr | 364 Cr. |
| RSI | 50.0 | MACD | -20.5 | Volume | 4,30,957 | Avg Vol 1Wk | 5,86,884 |
| Low price | 2,013 ₹ | High price | 3,037 ₹ | PEG Ratio | 59.6 | Debt to equity | 0.09 |
| 52w Index | 21.2 % | Qtr Profit Var | 0.74 % | EPS | 73.5 ₹ | Industry PE | 20.7 |
📊 Financials: The company shows strong profitability with ROE at 22.4% and ROCE at 29.2%, reflecting efficient capital utilization. Debt-to-equity is very low at 0.09, indicating a solid balance sheet. Quarterly PAT improved slightly from ₹364 Cr. to ₹372 Cr., showing stable earnings momentum. Cash flows appear healthy given consistent profitability.
💹 Valuation: Current P/E of 29.8 is higher than the industry average of 20.7, suggesting moderate overvaluation. The PEG ratio of 59.6 is extremely elevated, pointing to limited growth relative to price. Book value of ₹339 against a market price of ₹2,230 implies a stretched P/B ratio. Intrinsic value appears lower than current market levels.
🏭 Business Model: The company operates in IT services and consulting, benefiting from global client relationships, digital transformation demand, and strong delivery capabilities. Competitive advantage lies in operational efficiency, brand reputation, and diversified service offerings.
📈 Entry Zone: A favorable entry would be closer to ₹2,050–2,100, near the recent low of ₹2,013. Current price of ₹2,230 is slightly above fair value, so cautious accumulation is recommended.
⏳ Long-Term Holding: Strong fundamentals, low debt, and consistent profitability support long-term holding. However, stretched valuations mean investors should accumulate gradually on dips for better returns.
Positive
- ✅ Strong ROE (22.4%) and ROCE (29.2%)
- ✅ Low debt-to-equity ratio (0.09)
- ✅ Consistent quarterly PAT growth
- ✅ Dividend yield of 2.55% adds shareholder value
Limitation
- ⚠️ High P/E (29.8) compared to industry average
- ⚠️ Extremely elevated PEG ratio (59.6)
- ⚠️ Modest quarterly profit variation (0.74%)
Company Negative News
- 📉 Decline in FII holding (-0.28%) shows reduced foreign investor confidence
Company Positive News
- 📈 Increase in DII holding (+0.39%) reflects domestic institutional support
- 📈 Dividend yield of 2.55% provides strong shareholder returns
Industry
- 💻 IT services sector benefits from global digital transformation demand
- 📊 Industry P/E at 20.7 suggests peers are valued lower
- 🌍 Growth opportunities in cloud, AI, and automation services
Conclusion
Overall, the company is financially strong with excellent return ratios, low debt, and consistent profitability. Valuations are stretched compared to industry peers, so the best strategy is cautious accumulation near ₹2,050–2,100 for long-term holding, while avoiding aggressive buying at current levels.
Would you like me to extend this with a peer comparison against other IT service companies, or a technical analysis view to highlight support/resistance and momentum indicators?