Mid-tier IT services firm Mphasis reported a nearly 11% year-on-year rise in consolidated net profit to ₹489.5 crore for the June quarter, as the company continued to bet on artificial intelligence-led deals even as margins came under pressure.
The net profit, however, declined sequentially from ₹509.6 crore reported in the March quarter.
Revenue from operations for the quarter stood at ₹4,384 crore, up 17.5% from ₹3,732.5 crore a year earlier and 3.3% higher sequentially.
In constant currency terms, revenue growth was more muted at 8.3% YoY and 2.1% sequentially, while in US dollar terms the company grew 7.7% YoY and 1.8% QoQ.
Earnings per share for the quarter were ₹25.6, up from ₹23.2 a year ago but down from ₹26.7 in the preceding quarter.
The Bengaluru-headquartered company said new deal wins, measured in Total Contract Value (TCV), stood at $461 million for the quarter, of which 63% were classified as AI-led—the company's clearest disclosure yet on how much of its incremental business is being driven by AI-related work.
"We are pleased with the momentum as we enter the financial year, and the early market acceptance of Mphasis Tria, which has elevated us to a platform-led AI partner for enterprise clients," Nitin Rakesh, CEO and Managing Director of Mphasis, said in a statement.
"Q1 FY27 was a strong start, with revenue growth of 2.1% sequentially in constant currency, with strong pipeline and TCV wins. We expect further acceleration in sequential growth in Q2 FY27," he added.
Margins Under Pressure
Gross margin for the quarter fell 140 basis points sequentially and 200 bps year-on-year to 26.9%, signifying that the IT firm is left with less cash to back new products. Operating margin declined 60 bps QoQ and 50 bps YoY to 14.8%, while net margin slipped 80 bps QoQ and 60 bps YoY to 11.2%, even as the topline expanded, pointing to rising costs even as the company scales its AI offerings.
Total expenses for the quarter rose to ₹3,784.5 crore from ₹3,203.3 crore a year earlier, with employee benefit costs, the largest expense line, at ₹2,408.7 crore.
Banking and Financial Services remained the largest vertical, contributing revenue of ₹2,354.8 crore for the quarter, followed by technology, media, and telecom at ₹812.4 crore, and insurance at ₹665.9 crore. The logistics and transportation segment saw a decline YoY.
Deal Wins and Acquisitions
Among the deals disclosed for the quarter, Mphasis said a tier-1 US telecom company picked the firm for AI-driven cost reduction and automation initiatives, while a top-tier investment bank engaged it for crypto, tokenisation, and multicurrency capability work.
The company completed two inorganic additions during the quarter—the acquisition of Theory and Practice Business Intelligence, a Canada-based decision-intelligence platform maker, and OKIN Process Inc's business process outsourcing unit.
In a subsequent event, Mphasis said it had signed a definitive agreement on July 1 to acquire a customer contract from IT staffing and recruitment firm Red Oak Tech for a consideration of up to $28 million, including $15 million in contingent payments. The deal had not closed as of the date the board approved the results.
Mphasis’ shares remained relatively stagnant post the results, trading at ₹2,235 apiece on the NSE at 12:10 pm on July 24.
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