Jefferies upgrades Mphasis stock rating to Buy on strong deal bookings

Jefferies has upgraded Mphasis Ltd. (MPHL:IN) from Hold to Buy, significantly raising its price target to INR3,100.00 from INR2,360.00. This more bullish stance follows Mphasis' in-line Q1 results, driven primarily by strong deal bookings and robust deal wins, high exposure to the growing BFSI vertical, and the resolution of previous concerns in its Logistics segment. Consequently, Jefferies has increased its FY26-28 revenue and EPS estimates by 1-2%, projecting approximately 12% EPS CAGR over the period, with the new price target based on a 27x PE multiple.

Analysis

Jefferies has issued a significant upgrade for Mphasis Ltd. (MPHL:IN), moving its rating from Hold to Buy and increasing the price target to INR3,100 from INR2,360. This bullish revision is underpinned by several fundamental drivers observed in the company's recent performance. While first-quarter results were in-line with expectations, the key catalyst for the upgrade was stronger-than-anticipated deal bookings. The positive outlook is further supported by the company's high exposure to the Banking, Financial Services, and Insurance (BFSI) vertical, which is experiencing an uptick in spending, alongside the resolution of prior issues within its Logistics segment. Reflecting this optimism, Jefferies has increased its FY26-28 revenue and earnings per share (EPS) estimates by 1-2%, now forecasting an approximate 12% EPS compound annual growth rate (CAGR) over that period. The new price target is derived from a 27x price-to-earnings (P/E) multiple on a rolled-forward valuation basis, signaling strong conviction in Mphasis' earnings potential.

Key Decisions for Investors

• Investors with a bullish view on the IT services sector, particularly in BFSI, should consider the upgraded Mphasis outlook as a positive signal, supported by strong deal flow and a favorable sectoral tailwind.
• The new price target is based on a 27x P/E multiple; it is prudent to evaluate this valuation against industry peers and the company's historical trading range to assess the risk-reward profile.
• Future performance will be highly dependent on sustaining the strong deal momentum and capitalizing on BFSI spending, so these metrics should be closely monitored in upcoming quarterly reports to validate the investment thesis.