June 7, 2012
V. Ganesh 
Falling HP profits coupled with delay in UID project execution finally pummeled MphasiS stocks down to their lowest in six months.
MphasiS stock crashed 13 % intra-day trading on Tuesday but recovered to close at Rs 345, down 5.39 %.
Earlier in the day, the stocks fell following reports that the company, smothering in debts, was planning to raise funds but a denial from the management salvaged the stocks.
Analysts claim that the company is experiencing growth pressures and that additional capex incurred in raising funds would add more debt. MphasiS, however, says that it has not entered into any transaction which requires it to leverage its cash and incur additional debt.
Cash position strong
“Our cash and cash equivalent position remains strong and unchanged. The company has cash and cash equivalents of Rs 2,338.5 crore on its balance sheet as on the last quarter ended April 30,” MphasiS said in a statement.
Everything’s fine!
MphasiS, which is 60 % owned by HP is experiencing revenue reduction from 72 % three years back to 58 %.
In the second quarter, HP business revenues suffered a 2.8 % decline due to ramping down of some projects, the company said. Similarly, in the first quarter, it witnessed a 3% decline from HP business.
“The ability of MphasiS to protect profitability will be under question as the company chooses to shift to non-HP business. The overall growth for MphasiS is expected to be weak, as subdued HP business could continue to exert pressure in the coming quarters,” said Jagannadham Thunuguntla, Strategist and Head of Research at SMC Global Securities.
According to Manik Taneja of Emkay Global, MphasiS has reduced its headcount over the previous quarter by 1,600 employees and this is adding to its growth woes.
It reported a net profit for the quarter of Rs 189 crore, down 14 % on y-o-y basis.
The Tinderbox Daily 