Scripscan:Mphasis Ltd
Bse code:526299
Cmp:600
Story:With the acquisition of AIG Systems and Solutions (AIGSS), Bangalore-based IT firm Mphasis has joined the likes of TCS and Wipro. Each of these Indian IT players has acquired the captive IT/BPO units of global financial institutions in the last three quarters.This confirms a trend among Indian IT exporters of ensuring their future revenues via inorganic route at a time when organic growth faces challenges from declining global IT spends.The AIGSS deal is of great importance to Mphasis in a way that it would help the latter in arresting a drop in its revenue from the banking and financial services and insurance (BFSI) vertical. Its share of BFSI revenue dropped 400 basis points (bps) to 39% in the April ''09 quarter from the previous quarter. AIGSS provides application development and maintenance services to companies in the AIG group worldwide. Its acquisition would increase Mphasis'' revenue from BFSI application services two-fold.It is difficult to ascertain the financial impact of this deal since the deal size and other details about the size and profitability of AIGSS have not been disclosed. However, on the operational front, the acquisition is expected to add new competencies for Mphasis in the areas of retirement products, personal auto and global insurance products.The takeover would increase Mphasis'' current application services team of over 11,500 by another 800 associates. The takeover would also help Mphasis strengthen the three-year old existing customer relationship with AIG. All this bodes well for the Indian IT exporter, which is a subsidiary of HP India, when looked against the backdrop of slowing revenue from new client accounts due to the economic downturn.At present levels, The valuation is steep when compared to the P/Es of other bigger IT companies. However, this does not take into account the accretion in the bottomline once the financials of AIGSS are consolidated with Mphasis.A long term buy.
Wednesday, September 23, 2009
Important Disclaimer&Privacy policy
This blog does not share personal information with third parties nor do we store any information about your visit to this blog other than to analyze and optimize your content and reading experience through the use of cookies.You can turn off the use of cookies at anytime by changing your specific browser settings.This privacy policy is subject to change without notice and was last updated on 20.3.2013. If you have any questions, feel free to contact me directly here: arunsharemarket@gmail.com
Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.
