Mphasis Limited: history, ownership, mission, how it works & makes money

A Brief History of Mphasis Limited

Mphasis Limited, founded in 1997, is an IT services company headquartered in Bangalore, India. Initially, it began as a product-focused company and later transitioned to provide IT services and consulting. The company made its mark in the global market with significant acquisitions and strategic partnerships.

In 2006, Electronic Data Systems (EDS) acquired Mphasis, which facilitated a broader portfolio of IT services and extended its global reach. This acquisition enabled Mphasis to benefit from EDS's extensive resources and helped it expand into new markets.

After EDS was acquired by Hewlett-Packard (HP) in 2008, Mphasis became part of HP’s enterprise services business. The integration provided Mphasis with enhanced technological capabilities and operational efficiencies. In 2016, Mphasis was spun off from HP and re-emerged as an independent publicly traded company.

As of fiscal year 2022, Mphasis reported revenues of approximately INR 10,347 crore, a substantial increase from INR 8,341 crore in fiscal year 2021, showcasing a growth trajectory of nearly 24%. The company's net profit for the same period was around INR 1,613 crore, up from INR 1,251 crore the previous year.

Mphasis has also focused on digital transformation services and cloud computing, which has become a pivotal aspect of its strategy. The company reported that its Digital revenues accounted for over 50% of total revenue in the last fiscal year.

As of September 2023, Mphasis had a workforce of approximately 45,000 employees, highlighting its significant growth and expansion across various geographies, including North America, Europe, and Asia. The company continues to invest in talent acquisition and training to bolster its capabilities in emerging technologies.

The stock performance of Mphasis has been robust, with shares trading at around INR 2,450 in September 2023, reflecting a year-to-date increase of approximately 30%. The company's market capitalization stood at around INR 1,14,000 crore during the same period.

Mphasis has also maintained a strong commitment to shareholder returns, recently announcing a dividend of INR 20 per share in August 2023. The company's policy focuses on sustainable growth and the delivery of value to shareholders.

Overall, Mphasis Limited has demonstrated resilience and adaptability within the fast-evolving IT services landscape, leveraging strategic acquisitions, expanding service offerings, and maintaining a strong financial performance.

A Who Owns Mphasis Limited

Mphasis Limited, a global IT services and solutions provider, has experienced significant changes in its ownership structure over the years. The current ownership is characterized by a mix of institutional investors and significant shareholders.

As of the third quarter of 2023, the following table details the primary shareholders of Mphasis Limited along with their respective ownership percentages:

Blackstone Group Inc. remains the largest shareholder of Mphasis, holding a majority stake of approximately 57.86%. This significant ownership allows Blackstone to exert a considerable influence over the company's strategic decisions and operations.

HDFC Mutual Fund and Life Insurance Corporation of India are also notable shareholders, holding 8.57% and 5.77% of the company, respectively. These entities contribute further to the institutional investment landscape surrounding Mphasis.

In terms of market performance, as of October 2023, Mphasis Limited shares are traded on the National Stock Exchange of India under the ticker symbol MPS. The share price has shown resilience and growth potential, reflecting the company’s robust service offerings and strategic direction.

Financially, Mphasis reported total revenues of approximately ₹10,021 crores (around $1.2 billion) for the fiscal year ending March 31, 2023, marking a year-on-year growth of 18.4%. The operating margin stood at 16.2%, highlighting the company’s efficient cost management and profitability.

Overall, the ownership structure of Mphasis Limited is predominantly influenced by institutional investors, with Blackstone as the key stakeholder, alongside strong support from mutual funds and insurance companies. This diverse ownership base plays a crucial role in the company's governance and strategic initiatives as it continues to position itself as a leader in the IT services sector.

Mphasis Limited Mission Statement

Mphasis Limited, a global technology services and solutions provider, emphasizes the importance of digital transformation. Their mission statement encapsulates their vision to "Delivering differential value through expertise and innovation." This reflects their commitment to delivering business outcomes through cutting-edge technology.

In pursuit of their mission, Mphasis has strategically focused on high-growth areas such as Cloud Computing, Artificial Intelligence, and Automation. Financially, Mphasis has demonstrated robust performance over the past few years, with a revenue increase of 15.4% year-over-year in FY2023, reaching a total revenue of approximately ₹11,380 crore.

Mphasis maintains a competitive edge by leveraging advanced technologies and skilled talent. As of Q2 FY2024, the company holds a market capitalization of approximately ₹33,000 crore, reflecting strong market confidence in their transformational capabilities.

Their commitment to sustainability and corporate governance aligns with their mission to create long-term value for stakeholders. Recent initiatives include a reduction of carbon emissions by 20% over the last three years and a goal to achieve net-zero emissions by 2030.

Furthermore, Mphasis has invested significantly in research and development, allocating approximately 5.5% of their annual revenue to drive innovation and enhance their service offerings.

The strategic focus on verticals such as Banking, Financial Services, and Insurance (BFSI), which contributes about 46% to total revenue, showcases their dedication to delivering tailored solutions that cater to evolving industry needs. This has positioned Mphasis as a trusted partner for digital transformation across multiple sectors.

Overall, Mphasis Limited’s mission statement not only highlights their commitment to technology but also underlines their vision for long-term growth and sustainability in a rapidly changing digital landscape.

How Mphasis Limited Works

Mphasis Limited, a global leader in IT services and solutions, primarily operates in the domains of cloud and cognitive services, application development and maintenance, and infrastructure management. As of the financial year ending March 2023, Mphasis reported a revenue of ₹12,584 crore, representing a growth of 19.3% year-over-year.

The company segments its operations into two main segments: Direct and Indirect. The Direct segment, which includes clients directly dealing with Mphasis, accounted for roughly 77% of total revenue, while the Indirect segment, focusing on channel partners, contributed about 23%.

Service Offerings

Mphasis's key services include:

• Cloud and Cognitive Services
• Application Development and Maintenance
• Infrastructure Management Services
• Business Process Outsourcing

Key Financial Metrics

Client Base and Geographic Reach

Mphasis serves a diverse client base across multiple sectors including banking, financial services, insurance (BFSI), healthcare, and technology. The company has operations in over 25 countries, with a significant presence in the United States, which contributes around 62% of its revenue.

Recent Developments

In 2023, Mphasis announced strategic partnerships with leading technology firms to enhance its service offerings in cloud computing and AI-driven solutions. This is aimed at capturing increasing demand in digital transformation services.

The company has also made investments in research and development (R&D), increasing its R&D expenditure to ₹600 crore in the last fiscal year, reflecting a commitment to innovation and staying competitive in the rapidly evolving tech landscape.

Stock Performance

Mphasis's stock has demonstrated robust performance in the market. As of October 2023, the stock price stands at approximately ₹2,550, with a Year-to-Date (YTD) performance showing an increase of 32%.

Conclusion

Mphasis Limited operates through a well-defined business model that prioritizes growth in technology services, maintaining a strong focus on enhancing client value through innovation and strategic partnerships. The company continues to leverage its strengths in cloud computing and cognitive services to solidify its market position.

How Mphasis Limited Makes Money

Mphasis Limited generates revenue predominantly through its IT services, focusing on digital, cloud, and cognitive services. The company's primary business model is based on providing services such as application development and maintenance, infrastructure support, and business process outsourcing (BPO). In FY 2023, Mphasis reported a revenue of ₹12,411 crore, reflecting a growth of 21% year-on-year.

The revenue streams can be categorized into several key segments:

• Application Services: Contributed approximately 40% of the total revenue in FY 2023, focusing on custom application development and management.
• Infrastructure Services: Accounted for around 30% of total revenue, driven by cloud services and automation.
• Business Process Outsourcing: Made up about 25% of the revenue, emphasizing customer service and back-office operations.
• Digital Services: This segment has been growing rapidly, with a contribution of 35% to overall revenue, particularly in areas like AI and analytics.

Mphasis operates mainly in North America, which is its largest market, comprising over 60% of its total revenues. The company has established long-term contracts with major clients, contributing to its stable revenue stream. In FY 2023, Mphasis reported a Net Income of ₹1,659 crore, resulting in a net profit margin of 13.4%.

The company employs a hybrid engagement model, which combines on-site and offshore resources, allowing it to optimize costs effectively. This approach has helped maintain a competitive edge, enabling Mphasis to achieve an average deal size of approximately $15 million, with the annual contract value growing by about 18% year-on-year.

Mphasis has invested heavily in R&D, specifically in AI and machine learning, which has opened new revenue streams. In FY 2023, R&D expenditure amounted to ₹300 crore, contributing to innovations that enhance client service delivery and operational efficiency.

Furthermore, Mphasis has made strategic acquisitions to bolster its capabilities. For instance, in 2022, Mphasis acquired a digital transformation firm for approximately ₹1,200 crore, aimed at expanding its footprint in the healthcare sector. This acquisition is expected to bring in additional revenue of ₹500 crore over the next few years.

In terms of financial performance, Mphasis reported an EBITDA margin of 19.5% in FY 2023, showcasing its ability to maintain profitability despite rising costs and competitive pressures in the IT services sector. The company has consistently provided returns to shareholders, with a dividend payout ratio of 30%.