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Monday, June 28, 2010

Stock To Buy For Long Term Investment - MPHASIS

Mphasis is a leading provider of Applications services, Remote management services and BPO services. It is a stock to buy for long term investment.

CMP: Rs 575
Target price: Rs 720
Projected PE: 16-17
Investment period: 6-12 months

The company delivers real improvements in business performance for Clients through a blend of technology know-how, domain and process expertise. The Current strength of over 37,000 employees enable Mphasis to service its clients in financial services, healthcare, transportation and communications, consumer & retail industries .

Recent Stock News
Mphasis launched its BPO centre in Raipur, Chhattisgarh which is expected to recruit over 500 employees. It will provide services to Telecom operator Idea Cellular from this centre.

Mphasis prices were renegotiated with HP from cost-plus basis to rate-card basis. The lower pricing will decrease the operating profit margins but it would be off-set by larger business volumes from HP.

Mphasis has acquired Fortify Infrastructure Services, a global provider of offshore based Remote IT Operations and Management (ROM) Services. This acquisition will facilitate Mphasis to provide outcome based services and grow with a CAGR of 30% in the following three years.

Why to buy stocks of Mphasis?
The company’s stock has been consistently outperforming the Sensex In the time span of a year, Jun’09 to Jun’10, Mphasis stock price scaled up from Rs.385 to Rs.581 (made a high of 796.5), giving a return of around 50%, while Sensex grew from 14493 to 16922, giving return of around 16%.

MPHASIS has been ranked No. 23 in Bloomberg Business Week’s Tech 100 list; a ranking of the world’s best performing tech companies of 2009 and is ranked third best in the world in terms of total shareholder return. This is the first time MphasiS
made it to the Business week’s Top 100 list of technology companies.

Dataquest recognize the company as one of the Top 20 IT companies in the country with the highest growth percentage. National Association of Software and Services Company India (NASSCOM) ranks it as #7 among the top software exporters.

It is certified with ISO 9001:2008, ISO/IEC 27001:2005 (formerly known as ISO 17799) and is assessed at CMMI v 1.2 Level 5. It also provides SEI CMMI, ISO and Six Sigma related services support.

Fundamentals Of Stock:
* It acquired AIG Systems Solutions Private Limited (AIGSS), an Indian subsidiary of American International Group Inc (AIG), USA. Based in Chennai and Kolkata, AIGSS has over 700 employees and provides IT services to AIG and its member companies. It was then renamed as MphasiS Fin Solutions Private Limited. This acquisition will help the Company to augment its capabilities for the insurance industry.

* 72% of total revenues of Mphasis came from HP and it added a total of 16 new clients, of which 13 were added through HP channel. Mphasis’ association with HP has not only enabled strong new client wins but has also improved the average deal
size. The alignment with HP has significantly reduced the competition risk and company is leveraging HP’s technology and service offerings to broaden its client base. It depicts the strong parent backing by HP leading to the future growth of the
company.

* Company has set up the off-shore delivery centre in Sri Lanka which would get operational by mid 2010 and will join the company’s network of Global Delivery Centres, by providing an array of IT and ITES services to clients, world-wide. This new global delivery centre would set up new milestones in the journey of company.
Download detailed stock report here

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