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Mphasis - Company Brief

Mphasis is the 7th largest IT & BPO services company in India owned by HP. It provides application services, BPO and infrastructure services to clients in industries like financial services, manufacturing, and telecom. While previously heavily reliant on HP, Mphasis has been reducing its captive business and becoming more independent. It has a workforce of over 40,000 employees and resource utilization of 88%. Recent developments include exiting loss-making government projects and expanding its digital risk business through a large new contract.

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Santosh Kathira
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152 views6 pages

Mphasis - Company Brief

Mphasis is the 7th largest IT & BPO services company in India owned by HP. It provides application services, BPO and infrastructure services to clients in industries like financial services, manufacturing, and telecom. While previously heavily reliant on HP, Mphasis has been reducing its captive business and becoming more independent. It has a workforce of over 40,000 employees and resource utilization of 88%. Recent developments include exiting loss-making government projects and expanding its digital risk business through a large new contract.

Uploaded by

Santosh Kathira
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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MPHASIS

Business Overview
7th Largest IT & BPO Services company in India; Group
company of EDS (part of HP); Based out of Bangalore;
Company Founded by Jerry Rao in 1998 and currently headed by Balu
Ganesh Ayyar (CEO)

Application Services (APPS) , Business Process Outsourcing


Products & Services (BPO) Infrastructure Technology Outsourcing (ITO)

Financial Services, Manufacturing, Healthcare, Telecom,


Communication and Media Entertainment and Consumer &
Clients Retail industries. Across India, US, Europe, Asia –PAC, &
Middle East; Since the company is majority owned by HP, most
of its business is captive but it has been making efforts to move
away from captive business and become more independent
Business Overview
• Earlier the company was heavily reliant on HP business
but now direct business is major contributor.
• There is still high dependency on BFSI sector
• Resource utilization has been one of the highest in the
industry at 88% with an employee strength of 40,000 +
employees
• Recent developments
• The company has exited many loss-making govt projects like
Aadhar
• The company’s Digital Risk business which it had acquired last
year had won a $102 Mn contract and Mphasis has been investing
in the business to expand capacity
Industry Overview
Dominated by large players; Major Players
The IT & BPO industry was around Company Market Share
$ 88 Bn in size in FY 2011. TCS 10.10%
In FY 2014, ~$ 87 Bn is expected Wipro 7.70%
by the export market size alone Infosys 7.00%
Cognizant 6.10%
HCL Tech 4.30%
IT services Tech Mahindra 1.10%

• Market size of $ 52 Bn
• 76% export
• BFSI large chunk Rupee depreciation has helped
BPO the industry; US H1 – B visa
restrictions remain a major concern
• Market size of $ 19 Bn
for the IT industry; There are
• 84% export attempts to diversify businesses
Software products & engineering beyond traditional clientele i.e.
BFSI & US markets
• Market size of $ 17 Bn
• 76% export
Financial Overview INR Crs
6000 5490.68
5036.52 5097.96
• The company has grown by ~ 9% CAGR during 5000 4263.88
period 2009-12. 4000
• During the same period the employee costs have 3000
increase by 13% +. During the same period the
2000 1375.33
software development costs have increased by 47% 1175.77 1164.65 1216.95
+ 1000
• This has resulted in the overall expenditure of the 0
company to increase by ~12% during the 3 years. FY 2009 FY 2010 FY 2011 FY 2012

• However, the decrease in EBITDA margin wasn’t as Revenue Income Operating Profit / EBITDA

significant thanks to rupee depreciation which has


helped maintain EBITDA % to 20% and above. EBITDA %age
• The company has managed its working capital 30% 28% 27%
quite well ensuring healthier cash flows. Its 25% 23% 22%
receivables period has been improving steadily
20%
indicating that the client billing and collection period
15%
is made shorter and the creditor days has
lengthened indicating that the software license 10%
payments and other payments period terms have 5%
been improved. 0%
FY 2009 FY 2010 FY 2011 FY 2012
Valuation summary
NetSales EBIDTA (Rs. EBIDTAM Market Cap
Company Name Year End (Rs. Mn) Mn) % (Rs. Mn) EV TTM PE EV/EBITDA
HCL Tech. 201206 89,072 28,111 28 756,343 756,329 18 27
Hexaware Tech. 201212 9,125 3,687 35 39,188 38,085 14 10
Infosys 201303 367,650 132,330 30 1,879,992 1,675,982 21 13
Mindtree Ltd 201303 23,618 4,870 19 57,515 56,531 15 12
Mphasis 201210 35,482 8,796 21 80,395 81,522 15 9
NIIT Tech 201303 11,083 2,689 21 17,429 16,855 9 6
Patni Computer Sys. 201112 21,517 7,028 26 70,052 69,129 15 10
Persistent Systems 201303 9,968 3,063 27 29,578 29,294 14 10
Sonata Software 201303 2,330 335 5 3,570 2,947 16 9
TCS 201303 484,261 165,367 30 4,341,410 4,302,588 33 26
Tech Mahindra 201303 60,019 10,832 17 367,311 378,645 34 35
Wipro 201303 332,265 82,588 21 1,268,980 1,251,926 21 15

Mphasis’ low EV is reflective of its lower


EBITDA margin in FY 2013 (Not in graph) and
lower than spectacular growth in topline

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