Mphasis Limited

“Mphasis is a net-cash, asset-light IT services firm with genuine AI-driven re-acceleration (14.4% revenue growth in Q4 FY26), high ROIC (~30%), and clean governance — but it operates in a structurally low-moat industry, trades at a fair-to-full 23x trailing earnings, and is weighed by Blackstone's ongoing stake distribution from ~60% to ~31%, which caps multiple expansion and signals PE exit rather than long-term ownership. The business is not a compounder of the highest order: margins are thin (~15% EBIT), reinvestment is constrained by a dividend-heavy policy, and Mphasis lost meaningful peer ground to Persistent and Coforge during FY22–25 — only now re-converging to average. With a base-case 10-year return of 2–2.5x and limited margin of safety at current prices, conviction is insufficient for a BUY; the right action is to track for a 20–25% entry improvement toward INR 1,700–1,850.”