Mphasis profit rises, but operating margin slips for a second quarter
Revenue grew +17.40% YoY, but costs grew faster and other income remained a material 19.17% of pre-tax profit.
Filed 05 Nov 2026, 23:54 IST · after market close · Mphasis Ltd (MPHASIS)
Key takeaways
- Consolidated net profit grew +19.63% YoY to Rs 561.13 cr, ahead of operating profit growth of +14.91%.
- Operating margin narrowed 0.39 percentage points YoY to 18.10% as expenses grew +17.97%, faster than revenue at +17.40%.
- Other income contributed 19.17% of pre-tax profit, while the company reported $466 million of Q2 deal wins, 66% of them AI-led.
Price around the results
AI-led wins supported Q2 revenue growth
Mphasis reported consolidated revenue growth of +17.40% YoY to Rs 4,580.93 cr, while operating profit rose +14.91% to Rs 829.22 cr. Management said direct revenue grew +3.50% QoQ and +11.30% YoY in constant-currency terms. It attributed APPS and BPO growth to AI-led modernisation and new deal wins, including five large deals during the quarter.
Faster costs narrowed margins; other income lifted profit quality concerns
Expenses grew +17.97% YoY against revenue growth of +17.40%, narrowing operating margin by 0.39 percentage points; sequentially, expenses also grew slightly faster than revenue and reduced margin by 0.05 percentage points. Interest expense rose +26.14% YoY, adding to the pressure below operating profit. Other income accounted for 19.17% of pre-tax profit, while the sequential tax-rate decline of 1.41 percentage points supported the +14.63% QoQ rise in net profit.
Margin has declined for two consecutive quarters but remains above peers
Operating margin fell from 18.94% in Q4FY26 to 18.15% in Q1FY27 and 18.10% in Q2FY27, marking a second straight quarterly decline. It remained 1.12 percentage points above the 16.98% median among 70 Information Technology peers that had reported the same quarter. This quarter's YoY tax-rate increase of 1.98 percentage points also meant profit growth was not driven by a lower annual tax burden.
Management expects low-double-digit FY27 growth
Management said it expects FY27 revenue growth in the low double-digits despite an uncertain macro environment. The company said FY27 margins should remain within its 14.75%-15.75% target band and that H2FY27 should continue the momentum established in H1. Management also said it is targeting 80% conversion of FY27 net income into operating cash flow, with normalisation in FY28.
No immediate market reaction after the late filing
The consolidated results were filed after market close, so there was no market reaction to report at the time of publication. After the previous eight results, the stock rose five times and fell three times, with a median absolute move of 2.50%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹4,581 cr | ₹4,384 cr | +4.49% | +17.40% |
| Other income | ₹147 cr | ₹83 cr | +77.61% | +97.17% |
| Expenses | ₹3,752 cr | ₹3,589 cr | +4.55% | +17.97% |
| Operating profit | ₹829 cr | ₹796 cr | +4.24% | +14.91% |
| Operating margin (%) | 18.10% | 18.15% | — | — |
| Interest | ₹55 cr | ₹49 cr | +13.79% | +26.14% |
| Depreciation | ₹154 cr | ₹147 cr | +4.45% | +20.28% |
| Profit before tax | ₹768 cr | ₹683 cr | +12.42% | +22.85% |
| Tax | ₹206 cr | ₹193 cr | +6.81% | +32.58% |
| Net profit | ₹561 cr | ₹490 cr | +14.63% | +19.63% |
| EPS (₹) | ₹29.39 | ₹25.65 | +14.58% | +19.23% |
Operating margin of 18.10% compares with a Information Technology sector median of 16.98% across 70 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Direct revenue grew 3.5% quarter-on-quarter and 11.3% year-on-year in constant-currency terms in Q2FY27.
- APPS and BPO growth was driven by AI-led modernization and new deal wins.
Guidance & outlook
- Mphasis expects FY27 revenue growth in the low double-digits despite the uncertain macro environment.
- Mphasis expects FY27 margins to remain in the target band of 14.75%–15.75%.
- Mphasis is targeting conversion of 80% of net income to operating cash flow in FY27, with normalization in FY28.
- Mphasis expects H2 FY27 to continue the momentum established in H1.
New orders
- Mphasis reported TCV wins of $466 million in Q2FY27, with 66% AI-led.
- Mphasis won five large deals in Q2FY27.
Problems & risks
- Mphasis cited the uncertain macro environment as a challenge to FY27 revenue growth.
What to watch
- Whether consolidated operating margin holds above 18.10% after two consecutive quarterly declines.
- Whether other income's 19.17% share of pre-tax profit moderates.
- Whether operating-cash-flow conversion reaches management's stated 80% FY27 target.