We are evaluating options for inorganic growth: V Suryanarayanan


Mphasis enables customers to reimagine their digital future by applying a unique formula of integrated cloud and cognitive technology. Mphasis X2C2 formula for success drives five dimensions of business value with an integrated consumer-centric Front to Back Digital Transformation, enabling Business Operations and Technology Transformation. Mphasis applies advancements in cognitive and cloud to traditional Application and Infrastructure Services to bring much needed efficiency and cost effectiveness. Mphasis’ core reference architectures and tools, combined with domain expertise and hyper specialization are the foundation for building strong relationships with marquee customers.

Replying to NewsBarons, V Suryanarayanan, ‎Executive Vice President & Chief Financial Officer, Mphasis stated, “We are on the right track for ‘accelerating growth’ and we expect it to continue in the coming quarters as well. “

NB:Brief us about your financials for the quarter?

V Suryanarayanan: We had a good first quarter and now a robust second one. These are two strong quarters from a growth perspective. We do expect growth to continue even though it may be moderated based on the seasonality effect in Q3,18. But clearly, FY18 is turning out to be a year of growth. In Q2, our net profit grew by 5.6% QoQ and net revenue grew by 4.5% QoQ to Rs. 16,047mn.

NB:How was the quarter as a whole?Brief us about your business in different segments?

V Suryanarayanan: Our net revenue grew by 4.5% QoQ to Rs.16,047 million in Q2 FY18. Our Direct Core revenue grew 5.2% QoQ and 7.2% YoY. HP/DXC revenue grew 6.6% QoQ and 14.3% YoY. We had a robust new deal wins of USD 123 million TCV in Direct International business of which 72% are in focus areas of Digital, NextGen and Governance, Risk and Compliance (GRC).Our net profit grew 5.6% QoQ and EPS grew 12.6% QoQ.Overall, we are pleased with our performance this quarter.

We expect growth to be better next year and are confident that it will be in line with the market. Our long-term ambition is to grow above market and have a continuous improvement in margin and if we can achieve that this year, then we will be well set for next year.

NB:How do you see deal pipeline going forward?

V Suryanarayanan: We expect deal pipeline to be robust coming quarters.We are planning to expand business in Europe.We saw robust deal wins of USD 123 mn total contract value (TCV) in direct international business, of which 72 per cent were in focus areas of digital, NextGen and Governance, Risk and Compliance (GRC).Last year, we had around 80 to 100 million per quarter as deal wins and going by the current pipeline, we would be going 100 plus quarter on quarter.

As I said earlier, 2018 will be a growth year for Mphasis as an organization. Robust new deal wins of USD 123 million TCV in Direct International business in this quarter and 183 million in Q1 is a clear reflection of the growth trajectory. We are on the right track for ‘accelerating growth’ and we expect it to continue in the coming quarters as well.

What is your revenue mix?

V Suryanarayanan: About 80% of our revenue comes from US, 10% from EMEA, 6% from India and 4% from ROW. We will continue to focus on our core markets, i.e. North America and Europe. We still have a lot of potential to grow our business in these regions.

NB:Any acquisition plans?

V Suryanarayanan: We are looking for tuck in acquisition. As we expand our footprint in Europe and North America, we will be going strong on the acquisition front. I do not want to make any specific remarks, but we are certainly evaluating options for inorganic growth and strengthening our capabilities in the identified areas.

NB:What is your outlook for the IT sector?

V Suryanarayanan: There have been issues raised regarding visas, but there was no major impact for IT players.Technology wise, the industry has been witnessing massive developments in terms of artificial intelligence, analytics, automation. These will be the driving factors for growth in the industry.