Labour Code Change Dent Mphasis Q3 Profits, Revenue Rises 2.6% QoQ

Mphasis Limited reported a 2.6% quarter-on-quarter and 12.4% year-on-year increase in revenue in the third quarter of FY26, but a change in labour laws led to a charge of ₹35.5 crore, denting profitability during the period.

For the quarter ended December, the IT services company said revenue rose to ₹4,002.6 crore in reported terms.

In constant currency terms, revenue grew 1.5% sequentially and 7.4% from a year earlier.

Direct revenue increased 3.1% QoQ and 15.9% YoY on a reported basis, and 1.9% QoQ and 9.6% YoY in constant currency.

The company said it is pleased with the continued progress on all metrics around growth across the business.

CEO and MD Nitin Rakesh said that Mphasis NeoIP is supersizing the company’s pipeline and deals, paving the way for faster revenue growth and continued gains in wallet share driven wins.

Net profit after the exceptional item related to the labour law change declined 5.7% quarter-on-quarter and rose 3.4% year-on-year to ₹442.2 crore.

Operating margin for the quarter came in at 15.2%, down 10 basis points quarter-on-quarter and year-on-year.

The company reported new total contract value (TCV) wins of $428 million during the quarter, with 64% of the deal wins coming from new-generation services.

In Q2, the company reported TCV wins of $528 million, with the CEO calling it a testimony to the company’s AI first approach.

During Q3, Mphasis announced several large deal wins, including a multi-year engagement with a large US bank for financial crimes and anti-money laundering transformation,

It also signed a core administration modernisation mandate from a top healthcare company using the Mphasis Javelina platform,  a comprehensive mortgage fulfilment partnership with a global bank, and a global remittance programme for another large bank.

The company recently told AIM that its Mphasis’ Sparkle Innovation Program has emerged as a significant channel for enterprise-focused innovation, helping it accelerate solution development, strengthen its AI-led portfolio, and support clients across banking, insurance, healthcare, logistics, and other sectors.

Srikumar Ramanathan, chief solutions officer,  said the programme is delivering measurable business outcomes and is set to expand further over the next two years.