Mphasis: revenue up 17.4%, but net debt added INR 8.9bn in the quarter

Mphasis reported the second quarter of fiscal 2027 (July-September 2026) with revenue of INR 45,809.3m, EBITDA of INR 8,310.0m and net profit of INR 5,611.3m. Year on year revenue rose 17.4% and profit 19.6%, while the growth pace was roughly the same as in the previous quarter (+17.5%). Our conclusion: fairly valued – the portal's model puts upside to fair value at +8%. Our view: the share is fairly valued; upside on the portal model +8%.

Our view: is there upside

Our view in numbers

Key takeaways

— Revenue added 17.4% year on year, and the pace was roughly the same as in the previous quarter

— EBITDA margin slipped to 18.1% from 18.5% a year earlier, even though profit grew faster than revenue

— Net profit rose 19.6% on revenue growth of 17.4% – net margin climbed to 12.2%

— Net debt rose in the quarter from INR 5.7bn to INR 14.6bn, and over the year from a net cash position to INR 14.6bn

— Leverage of 0.47x LTM EBITDA is moderate, but the debt itself has grown

— Dividend yield of 2.6% against LTM profit of INR 20.0bn

— EV/EBITDA of 15.1 versus its own three-year average of 17.5 – a 14% discount to its own history

Key figures, INR bn

Revenue added 17.4% year on year, and the pace was roughly the same as in the previous quarter

Revenue in the second quarter of fiscal 2027 (July-September 2026) was INR 45,809.3m, up 17.4% year on year. In the previous quarter growth was 17.5%, so the pace was roughly the same.

Revenue growth had been accelerating over recent quarters: 14.4% in calendar Q1 2026 and 17.5% in Q2. The company is now holding that elevated pace rather than slowing.

What matters for durability is that growth comes off a high base: revenue a year earlier was INR 39,019.1m. The company is adding roughly INR 6.8bn to quarterly revenue year on year.

EBITDA margin slipped to 18.1% from 18.5% a year earlier, even though profit grew faster than revenue

EBITDA in the reported quarter was INR 8,310.0m, or 18.1% of revenue, against 18.5% a year earlier. EBITDA growth of 14.8% lagged revenue growth of 17.4%.

Operating profit was INR 6,774.0m. The gap between EBITDA and operating profit – INR 1,536.0m – is depreciation.

The 0.4 percentage point margin decline is moderate, but it shows costs are growing slightly faster than revenue. At the same time net profit rose 19.6%, so something below the operating line supported the result.

Net profit rose 19.6% on revenue growth of 17.4% – net margin climbed to 12.2%

Net profit in the quarter was INR 5,611.3m, up 19.6% year on year. Net margin rose to 12.2% from 12.0%.

Profit grew faster than revenue despite the lower EBITDA margin. That means below operating profit – likely through financial items or tax – the result came out better than a year earlier.

Over the trailing twelve months net profit was INR 20,024.6m. That level should not be confused with the quarterly figure: the 19.6% growth applies to the reported quarter.

Net debt rose in the quarter from INR 5.7bn to INR 14.6bn, and over the year from a net cash position to INR 14.6bn

Net debt at 30 September 2026 was INR 14,572.4m. At 30 June 2026 it was INR 5,689.8m, so it rose by INR 8.9bn in the quarter.

Over the year the change is even more visible: at 30 September 2025 the company had net cash of INR 4.0bn, and now it has net debt of INR 14.6bn. The difference is INR 18.5bn.

Net debt to LTM EBITDA is 0.47x. That is a moderate level, but the debt itself has grown substantially, and this is the main balance-sheet change over the year.

Leverage of 0.47x LTM EBITDA is moderate, but the debt itself has grown

With LTM EBITDA of INR 31,309.4m, net debt of INR 14.6bn gives a ratio of 0.47x. That is below one turn of EBITDA, so leverage remains moderate.

However, the INR 18.5bn increase in debt over the year is almost 60% of annual EBITDA. The company has increased borrowings, and it now matters to watch what they are for and how quickly cash flow is generated to service them.

Operating cash flow for the reported quarter is not disclosed in the facts, so debt coverage by cash flow for this period cannot be judged. In the previous quarter it was INR 3,663.3m.

Dividend yield of 2.6% against LTM profit of INR 20.0bn

Dividend yield over the trailing twelve months is 2.6%. With market capitalisation of INR 465,775.7m, that corresponds to payouts of roughly INR 12.1bn.

The base for the dividend is LTM profit of INR 20,024.6m. Payouts are about 60% of that profit, close to the upper end of typical payout ratios.

A yield of 2.6% is modest against current rates, but for a growth company it plays a supporting role. A cut is possible if profit falls or capital spending rises.

EV/EBITDA of 15.1 versus its own three-year average of 17.5 – a 14% discount to its own history

LTM EV/EBITDA is 15.1 against its own three-year average of 17.5. The stock trades 14% below its own history on this multiple.

LTM P/E is 23.3 and return on equity is 20.3%. That is a combination of moderate valuation and high return on capital.

On the portal's model, upside to fair value is +8%. That is slightly below the upper bound of the neutral range, but still a positive result.

Valuation on the latest reported figures

Bottom line

The strong side of the report remains revenue: 17.4% year-on-year growth is holding at a high level, and the pace was roughly the same as in the previous quarter. Profit rose 19.6% and net margin climbed to 12.2%. The weak spot is the balance sheet: net debt over the year moved from net cash of INR 4.0bn to INR 14.6bn, and that is the main question for a holder. EV/EBITDA of 15.1 is 14% below its own three-year average of 17.5, and the portal's model puts upside at +8%. Our conclusion: fairly valued – the +8% upside on the portal's model does not provide a decisive edge. Our view: the share is fairly valued; upside on the portal model +8%.