MPHASIS - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.8
| Stock Code | MPHASIS | Market Cap | 43,444 Cr. | Current Price | 2,277 ₹ | High / Low | 3,037 ₹ |
| Stock P/E | 30.4 | Book Value | 339 ₹ | Dividend Yield | 2.50 % | ROCE | 29.2 % |
| ROE | 22.4 % | Face Value | 10.0 ₹ | DMA 50 | 2,334 ₹ | DMA 200 | 2,564 ₹ |
| Chg in FII Hold | -0.28 % | Chg in DII Hold | 0.39 % | PAT Qtr | 372 Cr. | PAT Prev Qtr | 364 Cr. |
| RSI | 48.9 | MACD | 1.94 | Volume | 20,62,239 | Avg Vol 1Wk | 8,84,916 |
| Low price | 2,013 ₹ | High price | 3,037 ₹ | PEG Ratio | 60.9 | Debt to equity | 0.09 |
| 52w Index | 25.8 % | Qtr Profit Var | 0.74 % | EPS | 73.5 ₹ | Industry PE | 21.6 |
📊 Financials: MPHASIS demonstrates strong efficiency with ROE at 22.4% and ROCE at 29.2%, supported by very low debt-to-equity (0.09). Quarterly PAT improved slightly (₹372 Cr vs ₹364 Cr), reflecting stability. EPS is healthy at ₹73.5, and dividend yield of 2.50% adds shareholder value. However, profit growth remains modest (+0.74%).
💹 Valuation: The stock trades at a P/E of 30.4, above the industry average of 21.6, indicating premium valuation. PEG ratio of 60.9 highlights severe overvaluation relative to growth. Book value of ₹339 provides a reasonable base, but intrinsic value appears stretched. Dividend yield offers some cushion, though valuation risks remain.
🏭 Business Model: MPHASIS operates in IT services, focusing on digital transformation, cloud, and application outsourcing. Its competitive advantage lies in strong client relationships, efficient delivery, and consistent dividend payouts. However, dependence on global IT spending cycles and pricing pressures are key risks.
📈 Entry Zone: Attractive entry would be closer to ₹2,050–2,150, near support levels and fairer valuation. Current price (₹2,277) is below the 200 DMA (₹2,564) and near the 50 DMA (₹2,334), suggesting consolidation. Long-term investors may accumulate cautiously on dips, with focus on sustained earnings growth.
Positive
- Strong ROE (22.4%) and ROCE (29.2%).
- Low debt-to-equity ratio (0.09).
- Healthy EPS of ₹73.5.
- Dividend yield of 2.50% provides steady returns.
- Quarterly PAT growth (+0.74%) shows resilience.
Limitation
- High P/E (30.4) vs industry average (21.6).
- PEG ratio of 60.9 indicates severe overvaluation.
- Profit growth remains modest.
- FII holdings declined (-0.28%), showing reduced foreign confidence.
Company Negative News
- Decline in FII holdings (-0.28%).
- Premium valuation limits upside potential.
Company Positive News
- Quarterly PAT improved (₹372 Cr vs ₹364 Cr).
- DII holdings increased (+0.39%), showing domestic institutional support.
- Consistent dividend payouts strengthen investor confidence.
Industry
- IT services sector remains competitive and global demand-driven.
- Industry P/E at 21.6 highlights MPHASIS’s premium valuation.
- Pricing pressures and global IT spending cycles affect margins.
Conclusion
⚖️ MPHASIS shows strong fundamentals with high efficiency and low debt, but trades at stretched valuations. Entry is favorable near ₹2,050–2,150 for long-term investors. Current levels suggest cautious accumulation, with better opportunities on dips. Holding is viable if earnings growth sustains, but valuation risks remain elevated.