Mphasis Raises FY27 Growth Outlook After 9.2% Dollar Revenue Growth in Q2

Mphasis has raised its FY27 revenue growth guidance to the low double-digit range after reporting 9.2% year-on-year growth in dollar revenue in Q2 FY27. The company had previously expected growth in the high single digits to low double digits.

Revenue grew 3.2% sequentially to $486.1 million, while constant-currency growth stood at 3.3% QoQ and 9.7% YoY. In rupee terms, revenue increased 17.4% annually to ₹4,580.9 crore.

The company secured $466 million in new total contract value (TCV) during the quarter, of which 66% was classified as AI-led. This compared with 42% in Q2 FY26 and 63% in Q1 FY27. However, total TCV declined from $528 million in Q1. Mphasis closed five deals worth more than $20 million each, against six in the previous quarter.

CEO and MD Nitin Rakesh said the company's pipeline reached a new high, growing 4.4% sequentially and 23% year-on-year. He attributed the growth to demand for business modernisation and reimagining projects.

Despite the increase in AI-led bookings, operating margin remained flat sequentially at 14.8%, down 50 basis points from a year earlier. Gross margin improved 20 basis points QoQ to 27.1%, but declined 100 basis points annually. Net profit increased 19.6% YoY to ₹561.1 crore, while earnings per share rose 19.2% to ₹29.4.

Mphasis' total headcount increased 6.9% YoY to 32,920, while billable headcount rose to 28,755 from 26,440. However, utilisation fell to 82% from 88% in Q2 FY26. This comes amid similar workforce and utilisation pressures across Indian IT.

Cash flow also weakened during the quarter. Operating cash flow turned negative at ₹54.8 crore, compared with ₹366.3 crore in Q2 FY26. Free cash flow was negative ₹62 crore, against ₹356 crore a year earlier.

Mphasis attributed the cash flow decline partly to $39.5 million in remittances initiated on September 30 and received in October. After adjusting for these payments, the company reported normalised cash flow of ₹322.9 crore and days sales outstanding (DSO) of 105 days, compared with reported DSO of 113 days.