Mphasis shares decline after rising 5% post Q1 earnings; here’s what analysts say

Mphasis shares dropped into negative territory after rising around 5% to ₹2,340 apiece during the morning market hours on Friday, July 24, as investors focused on the technology solutions provider’s Q1 financial performance.

Shares of Mphasis surged around 5% to hit an intraday high of ₹2,340 apiece on Friday’s market, compared to ₹2,232.40 apiece in the previous stock market close, according to NSE data.

As of 10:55 am, the midcap IT company shares were trading 1.3% lower at ₹2,202.90 on July 24. The firm announced its Q1 earnings report after market hours on Thursday, July 23.

While maintaining the revenue guidance for the financial year 2026-27, the management attributed its Q1 show to the strong order pipeline and momentum in the company’s TRIA-led deal wins.

In the April to June quarter, Mphasis secured three large deals with one above $100 million in total contract value. The company also said that the backlog strength along with shorter cycle deals supported the revenue growth.

Experts said that while the revenues surpassed expectations, the company's margins remained under expectations despite healthy deal growth in the period.

How did Mphasis perform in Q1 earnings?

On Thursday evening, Mphasis posted a 10% rise in its consolidated net profit (attributable to the owners) to ₹489.50 crore in the April to June quarter results for the financial year 2026-27, compared YoY with ₹441.70 crore in the same period a year ago.

However, on a quarter-on-quarter basis, the company’s consolidated net profits declined nearly 4% to their current level, from ₹5,096 crore in the Q4 results FY26.

According to the NSE filings, the company’s revenue from core operations surged 17.4% to ₹4,384 crore in the first quarter, in comparison to ₹3,732 crore in the same period a year earlier.

On a sequential basis, the company’s revenues advanced over 3% from ₹4,242 crore in the fourth quarter of FY2025-26.

Investors were focused on the company's margins, as data showed that Mphasis’ operating margins declined to 14.8% in the first quarter of FY27, from 15.3% in the same period a year earlier.

Management outlook for Q2 results

In the Q2 results, Mphasis’ management expects the IT software company to deliver its “best” sequential broad-based growth in constant currency (cc) terms in the last three years, according to the NSE filings.

“Deliver between high single-digit to low double-digit growth, despite the uncertain macro environment, on the back of strong execution,” said Mphasis management in their investor presentation.

Expanding on their guidance, the management also said that Mphasis expects its margins to range in the target band of 14.75% to 15.75%, while having 80% conversion of net income to the company’s operating cash flow.

“Q1 FY27 was a strong start, with revenue growth of 2.1% sequentially in constant currency, with strong pipeline and TCV wins. We expect further acceleration in sequential growth in Q2 FY27, as we continue to gain wallet share, as well as capture additional AI-led market share,” said Nitin Rakesh, CEO & Managing Director of Mphasis.

What do analysts say?

Analysts from leading US-based investment major, JP Morgan, said that Mphasis Q1 performance surpassed their revenue expectations while the company's margins missed estimates amid healthy deals growth.

“EBIT margins, however, contracted 60 bps QoQ to 14.8% and came 70 bps below the consensus JP Morgan estimates. It highlighted that the company expects further acceleration in CC QoQ growth in Q2 results, with highest growth in 3 years, indicating 3% growth,” said the analysts.

Experts from Morgan Stanley said that while the Q1 results showed strong growth visibility, which was partially offset by margin missing estimates.

“Q2 is expected to be the best QoQ growth quarter (seen in past 3 years), in cc terms, with broad-based growth. New deal wins in fiscal Q1 at $461 million were largely in line with estimates,” said the Morgan Stanley analysts.

How have Mphasis shares performed?

Mphasis shares have lost 12% in the last five years, 2,2% in the last three years, and are down over 16% in the past one year period, according to NSE data.

On a year-to-date (YTD) basis, the company’s stock has lost 21% and has dropped 1.7% in the last one-month period. Mphasis shares were trading 7.17% lower in the last five market sessions on the stock exchange.

Shares of Mphasis surged to a 52-week high of ₹3,037.20 on September 18, 2025, while the 52-week low was at ₹2,013 on March 30, 2026. The midcap IT company’s market capitalisation (m-cap) was at ₹41,990 crore as of the trading session on Friday, July 24, 2026.