Mphasis reports a 3.5% decline in revenue

Mphasis Ltd reported a growth of 2% in its organic revenue for the first quarter, net of rupee appreciation. However, total revenue fell 3.5% quarter on quarter to Rs 1,490 crore; Net of rupee appreciation, the decline is 2.6%.


Gross margins fell 40 bps to 26.2% over the two months period ended 31st March 2014.

“The Company had changed its financial year from 31st October to 31st March, and the QoQ comparison, the preceding quarter have been normalized from 2 to 3 months. While care has been taken in this normalization, it needs to be noted that the comparison is between two unequal periods. Hence, to that extent the percentages are approximate in nature,” Mphasis said.

The company, which is rumored to be the target of a sale process, said cash and cash equivalents increased by Rs 384 crore in Q1 FY15 to Rs 2,664 crore. Mphasis shares today rose 8% on rumors that Tech Mahindra may buyout HP’s stake in the company.

Tech Mahindra is scheduled to report its results on Thursday.

Mphasis also announced the appointment of Suryanarayanan V as the Chief Financial Officer (CFO). Surya was serving as interim CFO with Mphasis and has been with Mphasis since 2009.

Mphasis reported new deal wins of total value of US$ 45 million in its focus verticals. Direct business, which are not dependent on HP, stood at 64% of consolidated net revenues in the first quarter. However, direct business revenues declined by 4.2% QoQ or 3.0% net of rupee appreciation, affected by volatility in US mortgage industry, the company said.

“This quarter, we saw contrasting trends in our direct business. On one hand we are witnessing accelerated success in our direct organic business. On the other hand headwinds in the US mortgage market is impacting Digital Risk performance. Our investment in specialization is resulting in strong pipeline and wins,” said Ganesh Ayyar, Chief Executive Officer- Mphasis.