Rationale

 The ratings reaffirmation of Mphasis Limited (Mphasis) factors in its established position in the information technology (IT) and IT-enabled services (ITeS) industry and its presence across diverse business verticals. The company continues to maintain a strong execution track record along with well established relationships with a strong customer base consisting of top 15 banks in the US. In FY2025, Mphasis reported a revenue growth of 7% on a YoY basis in INR terms to Rs. 14,230 crore on the back of strong traction in the banking and capital market (BCM), insurance and technology and media segments. Sustaining the momentum, the company reported an 11% YoY growth in INR terms to Rs. 11,637 crore in 9M FY2026, backed by increasing large deal wins in the generative artificial intelligence (GenAI) and IT modernisation led projects with existing customers. The company maintained its healthy operating profit margins (OPM) of 18.6-18.7% in FY2025 and 9M FY2026, supported by easing out of wage cost inflation, improving employee utilisation and its cost optimisation initiatives. The last 12-months’ total contract value (TCV) was reported at $1.2 billion as on December 31, 2025, providing healthy revenue visibility. The ratings also continue to favourably factor in the healthy financial risk profile of the company, marked by a negative net debt position and strong liquidity profile as on December 31, 2025. Going forward, the company is expected to report healthy growth supported by its strong execution track record and order book position, along with sustenance of steady cash flow generation, resulting in a comfortable capital structure and coverage position. The ratings, however, remain tempered by Mphasis’s relatively moderate scale of operations and concentration on the US market (accounted for 80% of its revenues in FY2025) compared to some large domestic IT services companies. ICRA also notes the competition faced by the company from other prominent players in the global IT services industry, which limits its pricing flexibility to an extent. Additionally, industry participants, including Mphasis, continue to face challenges such as foreign currency fluctuations and talent acquisition and retention. Also, the demand for IT services remains exposed to macro-economic uncertainties in Mphasis’ key operating markets of the US, Europe and India. The company has sizeable contingent liabilities, especially with respect to income tax related matters. Any higher-than-anticipated dividend payouts or materialisation of contingent liabilities, impacting the company’s liquidity or credit profile on a sustained basis, will remain a key monitorable. The Stable outlook on the long-term rating reflects ICRA’s opinion that Mphasis’s credit profile will continue to remain strong, supported by its established position in the industry, a strong customer base, healthy cash flow generation from operations and a strong liquidity position.