Mumbai: Shares of IT services firm Mphasis Ltd. climbed nearly 2% on Monday after global brokerage Morgan Stanley raised its target price for the stock, projecting a sharp re-rating driven by a mix of company-specific and macroeconomic triggers.
The brokerage upgraded its price target to ₹3,625, up from ₹3,500, suggesting an upside potential of almost 30% from Friday’s closing price. At 1:30 p.m., Mphasis was trading 1.96% higher at ₹2,842.70, with the stock up 3% over the past month but nearly flat on a year-to-date basis.
Morgan Stanley said Mphasis was “positioning for a breakout,” citing an improving demand pipeline and favorable tailwinds that could accelerate growth. It added that the company’s disciplined approach “chasing growth within free cash flow margin guardrails” sets the stage for a valuation re-rating in line with mid-cap peers.
The brokerage identified five potential catalysts that could drive Mphasis’ stock higher in the medium term:
Steady pipeline expansion ensuring sustainable growth momentum.
Larger quarterly deal wins beyond the current $300–400 million run-rate, particularly in non-BFSI segments, with stronger revenue conversion.
Wider revenue diversification across healthcare and clients beyond the top 10, reducing dependence on BFSI.
Global interest rate cuts, which could support higher spending on digital risk (DR) services.
A possible promoter stake exit within the next 2–3 years, which could reset ownership dynamics and unlock fresh investor interest.
Reflecting optimism, Morgan Stanley also raised its revenue growth projections for Mphasis by 50 basis points for FY27 and 100 basis points for FY28 arguing that the narrowing growth gap with peers could close the current valuation discount.
The brokerage advised investors not to wait for the anticipated promoter stake sale as a trigger point, but rather to “double down” on the stock ahead of these expected changes.
Market analysts view the revised target and bullish commentary as a confidence booster for Mphasis, which has been consolidating amid a challenging macro environment. With broader IT spending expected to pick up if rate cuts materialize, the company appears well-placed to capture incremental demand across sectors.