Bengaluru-based IT solutions firm Mphasis experienced a significant drop in its stock market shares on BSE by Rs 123.1 or 5.5% to Rs 2,135 each on Friday, following a mixed performance in its fiscal Q2 results. The company's consolidated net profit declined sequentially by 1.0% to Rs 392 crore ($48 million), even with a marginal revenue increase of 0.8% to Rs 3,277 crore ($398.4 million) for the quarter ending September 30.
Mphasis, a prominent player in the IT Services industry according to InvestingPro Tips, has been operating with a moderate level of debt and consistently increasing earnings per share. Despite the recent dip, the company has maintained dividend payments for 23 consecutive years, a testament to its financial stability and commitment to its shareholders.
Interestingly, Mphasis marked an increase in its margin by 20 basis points (bps) to achieve 15.5% quarter-on-quarter, exceeding market expectations. This growth in margin was not enough to meet the projections made by Zee Business research, led by Managing Editor Anil Singhvi, which had anticipated a quarterly net profit of Rs 405 crore on the same revenue of Rs 3,277 crore, and a slightly lower margin of 15.3%.
According to InvestingPro's real-time metrics, Mphasis has shown a high return on invested capital and operates with a high return on assets. However, it's worth noting that the company's revenue growth has been slowing down recently. The stock is currently in oversold territory as suggested by the Relative Strength Index (RSI), which may present an opportunity for investors looking for a potential rebound.
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