Mphasis Books $466 Million in New Deals in Second Quarter, 66% AI-Led
Key Facts
Mphasis recorded a net new deal value of $466 million in the second quarter of fiscal 2027, with 66% of it AI-led, according to the company’s investor presentation. The company added that it closed five large deals during the quarter. The contracts put AI at the center of new business momentum, as the company said converting contracts into revenue depends on execution. Its data also showed the potential deal pipeline expanding to a record level, up 23% year over year. AI-related projects accounted for 71% of that pipeline in the same quarter.
Direct business revenue grew 11.3% year over year and 3.5% from the previous quarter, after accounting for currency movements, according to the investor presentation. Mphasis attributed growth in its applications and business process services segments to technology modernization deals driven by AI applications and to new contracts. Growth in direct revenue indicates that the expansion in deal wins was accompanied by an increase in activity recorded during the quarter, although the company ties the continuation of this trend to its ability to execute. Growth extended to banking and financial services, where the sector’s direct business revenue increased 15.0% year over year and 4.5% quarter over quarter in constant currency. In the technology, media and communications sector, direct revenue rose 14.5% year over year and 10.9% quarter over quarter.
The operating margin was 14.8% in the second quarter, unchanged from the previous quarter but down 50 basis points year over year, according to the results statement. Earnings per share rose 19.2% year over year to 29.4 rupees and increased 14.6% from the previous quarter. The indicators show a divergence between EPS growth and an operating margin below its level a year earlier. The company set a target operating margin range of 14.75% to 15.75% for fiscal 2027. It also forecast low double-digit revenue growth for the year, according to the investor presentation.
Operating cash generation did not keep pace with EPS growth in the first half of fiscal 2027. Net cash generated from operating activities was 3,115.07 million rupees in the six months ended September 30, 2026, compared with 6,697.38 million rupees in the same period a year earlier. Mphasis targeted converting 80% of net income into operating cash flow in fiscal 2027. The company said cash flow conversion is expected to normalize in fiscal 2028. This cash trajectory makes the company’s stated conversion target a parallel indicator for tracking revenue growth and new contracts.
Trade receivables stood at 51,111.22 million rupees on September 30, 2026, up from 41,927.22 million rupees on March 31, 2026, according to the audited results. The company said average days sales outstanding were 113 days in the second quarter, falling to 105 days after adjusting for remittances of $39.5 million initiated on September 30 and received in October. The adjustment provides timing context for some collections that had not arrived by quarter-end. Mphasis said the first half established a base for fiscal 2027 growth and that it expects momentum to continue in the second half, citing a strong potential deal pipeline, broader deal wins and their continued conversion into revenue.
The company had scheduled a call with investors and analysts on its second-quarter and first-half results for November 6, 2026, at 8:30 a.m. India time, according to the investor presentation. The call follows the results announcement for the period ended in September and gives the company an opportunity to present details of the performance and outlook included in its investor materials. The outlook includes low double-digit revenue growth and a target operating margin range of 14.75% to 15.75% in fiscal 2027. It also includes a target of converting 80% of net income into operating cash flow, with conversion expected to normalize in fiscal 2028.