3QFY2011 Result Update | IT

August 24, 2011

Mphasis
Performance highlights
(` cr) Reported net sales Adjusted net sales* Reported EBITDA Reported EBITDA margin (%) Adj. EBITDA margin (%)* Reported PAT 3QFY11 1,294 1262 252 19.4 15.3 195 2QFY11 1,257 1,247 241 19.1 16.3 217 % chg(qoq) 2.9 1.2 4.5 31bp (97)bp (10.4) 3QFY10 1,279 1,279 316 24.7 24.7 271 % chg (yoy) 1.1 1.4 (20.4) (525)bp (940)bp (28.2)

ACCUMULATE
CMP Target Price
Investment Period
Stock Info Sector Market Cap (`cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code IT 8,295 0.8 712/308 109,464 10 16,285 4,889 MBFL.BO MPHL@IN

`396 `420
12 Months

Source: Company, Angel Research; Note: * adjusted for one offs and reversals

Mphasis reported dismal set of 3QFY2011 results with volume growth of 3.0% qoq - out of which only 1.3% is from normal operations, the rest 1.7% is derived due to several one-off items booked in revenue. At the CMP, the stock is trading at 10.9x FY2013E EPS of `36.4 with a strong cash position of `2,029cr, which warrants limited downside. We recommend an Accumulate rating on the stock. Quarterly highlights: Mphasis reported revenue of US$290mn, up merely 2.9% qoq. In rupee terms also revenue growth was 2.9% qoq with revenues at `1,294cr. These revenues include one-time revenues of `66.5cr. Also, `34.6cr of revenues were not booked in this quarter due to incomplete documentation. Adjusting for all this, revenues came in at `1,262cr, up merely 1.2% qoq. Mphasis reported 31bp qoq expansion in its EBITDA margin to 19.4%. However, the company did provision reversal of `11.0cr in employee costs and `15.6cr in S&M expenses. Adjusting for these reversals and one offs in revenues, EBITDA margin came in at 15.3% vs. 16.3% in 2QFY2011. Outlook and valuation: The open billable positions in the application business declined from 1,000 to 825. However for the ITO business, it remained flat at 600. This highlights that growth in ITO remains intact and would continue to be the possible growth driver for the company. Going forward, management expects the direct channel (33% to revenue) and HP non-enterprise solution business (which is currently ~5% of revenue from HP channel) to drive growth, whereas the HP-ES business is expected to remain sluggish. We expect revenue growth will be muted at 2.7% yoy for FY2011E considering that in 1QFY2011 revenue run rate fell by 10% qoq as well as companys revenue for 2QFY2011 and 3QFY2011 were driven by one-offs. However, the above-mentioned growth drivers are expected to result in the companys revenue to record a 10% CAGR over FY201113E. We recommend Accumulate rating on the stock with a target price of `420, valuing it at 11.5x FY2013E EPS.

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 60.5 6.3 20.4 12.8

Abs. (%) Sensex Mphasis

3m

1yr

3yr 13.1 76.5

(9.6) (11.1) (8.2) (34.4)

Key financials (Consolidated)

Y/E Oct. (` cr) Net sales % chg Net profit % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2009 4,271 124.0 916 220.0 26.6 43.4 9.1 3.5 39.1 39.7 1.7 6.5

FY2010 5,036 17.9 1,091 19.0 25.1 52.0 7.6 2.5 33.1 32.9 1.3 5.3

FY2011E 5,102 1.3 808 (25.9) 18.9 38.6 10.3 2.1 20.1 19.8 1.2 6.5

FY2012E 5,485 7.5 707 (12.5) 16.2 33.7 11.7 1.8 15.3 15.1 1.1 6.6

FY2013E 5,924 8.0 719 1.6 14.5 36.4 10.9 1.6 13.6 12.5 0.9 6.1

Srishti Anand
022-39357800 Ext: 6820 srishti.anand@angelbroking.com

Ankita Somani
022-39357800 Ext: 6819 ankita.somani@angelbroking.com

Please refer to important disclosures at the end of this report

Mphasis | 3QFY2011 Result Update

Exhibit 1: 3QFY2011 reported performance (Consolidated)

(` cr) Net revenue Cost of revenue Gross profit SG&A expenses EBITDA Dep. and amortisation EBIT Interest income Other income PBT Income tax PAT EPS EBITDA margin (%) EBIT margin (%) PAT margin (%)
Source: Company, Angel Research

3QFY11 1,294 940 354 102 252 44 208 (2) 44 250 56 195 9.3 19.4 16.0 14.6

2QFY11 1,257 919 339 98 241 34 207 1 48 257 39 217 10.4 19.1 16.5 16.6

% chg (qoq) 2.9 2.3 4.6 4.6 4.5 30.6 0.3

3QFY10 1,279 860 419 103 316 40 276 (0) 18

% chg (yoy) 1.1 9.3 (15.6) (1.0) (20.4) 9.0 (24.7)

9MFY2011 3,784 2,735 1,049 300 750 114 636 (0) 127

9MFY2010 3,691 2,447 1,244 300 944 126 818 1 77 896 89 806 38.5 25.6 22.2 21.9

% chg (yoy) 2.5 11.8 (15.7) (0.1) (20.6) (10.1) (22.2)

(2.4) 41.7 (10.4) (10.4) 31bp (41)bp (209)bp

293 22 271 12.9 24.7 21.5 20.9

(14.5) 157.2 (28.2) (28.2) (525)bp (550)bp (636)bp

763 125 639 30.5 19.8 16.8 16.9

(14.8) 39.7 (20.8) (20.8) (577)bp (535)bp (497)bp

Exhibit 2: 3QFY2011: Actual vs. Angel estimates

(` cr) Net sales* EBITDA margin (%)* PAT Actual Estimate % Var

1,262 15.3 195

1,303 15.4 156

(3.2) (14)bp 24.9

Source: Company, Angel Research; Note: * adjusted for one offs and reversals

Dismal performance
Mphasis reported dismal set of numbers for 3QFY2011. Dollar revenues came in at US$290mn, up merely 2.9% qoq. In rupee terms also revenue growth was 2.9% qoq with revenues at `1,294cr, led by 3.0% qoq volume growth. These revenues include one-time revenues of `66.5cr in Application services business. Also, `34.6cr of revenue was not booked in this quarter due to incomplete documentation, however cost related to this is already there in companys financial statement. Adjusting for all the above mentioned items, revenues came in at `1,262cr, up merely 1.2% qoq. The companys volume growth on 3.0% qoq includes 1.7% qoq gain due to one off items, so actual operational volume growth came in at 1.3% qoq. Revenue of the applications services business (contributing 63.0% to revenue) increased by 5.4% qoq to `807cr. These revenues include one-time revenues of `66.5cr as well as unrealised revenues of `34.6cr, so on a like-to-like basis, revenues of application services business increased by 1.3% qoq. Revenue of the ITO business (contributing 25.5% to revenue) increased by 2.9% qoq to `327cr, however revenues from BPO business (contributing 11.5% to revenue) declined by 9.6% qoq to `147cr. Revenue of the BPO business got negatively impacted due to high base effect derived on account of one-time revenue of `10.2cr realised in 2QFY2011, so on a like-to-like basis, BPO revenue declined by only 3.5% qoq.

August 24, 2011

Mphasis | 3QFY2011 Result Update

Also, on a consolidated level, Mphasis had a hedging reserve gain of `12.5cr in 3QFY2011.

Exhibit 3: Segment-wise performance

Particulars Net revenue break-up (` cr) Application services ITO services BPO services Total Revenue mix (%) Application services ITO services BPO services
Source: Company, Angel Research

3QFY11 807 327 147 1,281 63.0 25.5 11.5

2QFY11 766 318 163 1,246 61.4 25.5 13.1

3QFY10 809 290 159 1,258 64.3 23.0 12.6

% chg qoq 5.4 2.9 (9.6) 2.8 chg qoq (bp) 156 1 (158)

% chg yoy (0.3) 12.7 (7.4) 1.8 chg yoy (bp) (132) 246 (114)

Service vertical wise, application development and maintenance emerged as the companys primary growth drivers by posting 4.0% and 6.6% qoq. These segments were aided due to one off items in booked in revenues of application services. Revenues from infrastructure management also grew by 6.7% qoq to `271cr. However, all the other services verticals reported qoq decline in their revenues majorly because of high base effect of one time revenues booked n BPO segment in 2QFY2011.

Exhibit 4: Service-wise performance

Service type (` cr) Application maintenance Application development Customer service Service/Technical help desk Transaction processing Infrastructure management Knowledge processes License income Contribution to revenue (%) Application maintenance Application development Customer service Service/Technical help desk Transaction processing Infrastructure management Knowledge processes License income
Source: Company, Angel Research

3QFY11 473 335 73 58 64 271 8 36.9 26.2 5.7 4.5 5.0 21.1 0.6 0.0

2QFY11 443 322 77 69 73 253 8 35.6 25.9 6.2 5.6 5.8 20.3 0.6 0.0

3QFY10 470 339 66 69 69 226 20 0

% chg qoq 6.6 4.0 (5.2) (17.0) (11.7) 6.7 (1.3) chg qoq (bp)

% chg yoy 0.6 (1.1) 10.8 (16.9) (6.4) 20.0 (59.9) chg yoy (bp) (44) (78) 46 (101) (44) 319 (95)

37.3 27.0 5.2 5.5 5.4 17.9 1.6 0.0

132 31 (48) (107) (82) 78 (3)

Mphasis posted de-growth of 5.7% and 2.0% qoq in the banking and capital markets (contributing 24.8% to revenue) and insurance (contributing 9.5% to revenue) verticals, respectively. However, revenue of IT, communication and entertainment (contributing 30.0% to revenue) grew by whopping 17.5% qoq to `384cr.
August 24, 2011

Mphasis | 3QFY2011 Result Update

Exhibit 5: Vertical-wise performance

Vertical (` cr) Banking and capital markets Insurance IT, comm. and entertainment Emerging industries Contribution to revenue (%) Banking and capital markets Insurance IT, comm. and entertainment Emerging industries
Source: Company, Angel Research

3QFY11 318 121 384 458 24.8 9.5 30.0 35.8

2QFY11 337 124 327 458 27.1 9.9 26.2 36.8

3QFY10 330 115 323 490 26.3 9.1 25.7 38.9

% chg qoq (5.7) (2.0) 17.5 (0.1) (224.6) (46.6) 374.8 (103.6)

% chg yoy (3.8) 5.3 18.8 (6.4) (144.7) 31.2 429.2 (315.7)

chg qoq (bp) chg yoy (bp)

Mphasis reported decline in onsite pricing in application services business of 2.8% qoq to US$70/hr from US$72/hr. This was because the company has replaced its subcontractors, which generally have billing rates of US$110/hr, in US with the companys employees having billing rates of US$70-72/hr. This was done by management because subcontracting of work was not yielding good margins to the company (at around 10%). Onsite price point of ITO business remained stable qoq at US$67/hr; however it reported increase of 5.0% qoq in its offshore price points to US$21/hr.

Exhibit 6: Segment-wise pricing

Price movement (US$/hr) APO Onsite Offshore ITO Onsite Offshore BPO Offshore
Source: Company, Angel Research

3QFY11 70 20 67 21 7

2QFY11 72 20 67 20 7

3QFY10 71 20 67 20 7

% chg qoq (2.8) 0.0 0.0 5.0 0.0

% chg yoy (1.4) 0.0 0.0 5.0 0.0

Client metrics
Mphasis has been focusing on direct channel strategy to win clients. During the quarter, revenue from direct channel increased by 2.9% qoq in rupee terms with revenues at `427.1cr. Also, overall, the company added 27 new clients in 3QFY2011; 18 in direct channel and 9 in HP channel. Vertical wise, six clients were added in the banking and capital market service industry, one in insurance, seven in IT, communication and entertainment and the rest 13 in emerging industries. Mphasis witnessed addition of two clients in the over US$5mn category one in direct channel and one in HP channel, however, two clients got reduced in in the over US$20mn category both from HP channel. In the overall client metrics, there was no addition or deletion of number clients having size greater than US$1mn in any of the channel.

August 24, 2011

Mphasis | 3QFY2011 Result Update

Exhibit 7: Client concentration

(` cr) Top client revenue % contribution Top-5 clients revenue % contribution Top-10 clients % contribution
Source: Company, Angel Research

3QFY11 128.1 10 384.3 30 563.7 44

2QFY11 124.6 10 348.9 28 548.3 44

3QFY10 138.4 11 364.8 29 566.1 45

% chg qoq 2.8 10.2 2.8

% chg yoy (7.4) 5.3 (0.4)

Exhibit 8: HP and non-HP client breakup

No. of clients >US $1mn revenue Direct channel HP channel >US $5mn revenue Direct channel HP channel >US $10mn revenue Direct channel HP channel >US $20mn revenue Direct channel HP channel
Source: Company, Angel Research

3QFY11 120 42 78 41 13 28 24 9 15 12 4 8

2QFY11 119 41 78 39 12 27 25 10 15 14 4 10

3QFY10 109 34 75 39 11 28 22 9 13 13 3 10

Addition (qoq) 1 1 0 2 1 1 (1) (1) 0 (2) 0 (2)

Addition (yoy) 11 8 3 2 2 0 2 0 2 (1) 1 (2)

Hiring muted
During the quarter, Mphasis recorded net reduction of 474 employees in its total employee base. Only application services business reported addition of 327 net employees in its headcount while the rest two businesses ITO and BPO reported net reduction of 244 and 557 employees in their employee base.

Exhibit 9: Employee metrics

No. of employees Application services ITO services BPO services 3QFY11 15,547 8,378 15,842 2QFY11 15,220 8,622 16,399 3QFY10 14,578 7,273 16,424 Net add.(qoq) 327 (244) (557) Net add.(yoy) 969 1,105 (582)

Source: Company, Angel Research

EBITDA margin slips

Mphasis posted 31bp qoq expansion in its EBITDA margin to 19.4% on a reported basis. However, the company did provision reversal of `11.0cr in employee costs and `15.6cr in S&M expenses. In 2QFY2011, there was provision reversal of `32.3cr in cost of revenues, `13.5cr in S&M expenses and `13.5cr in G&A

August 24, 2011

Mphasis | 3QFY2011 Result Update

expenses. Adjusting for these reversals and one offs in revenues, EBITDA margin came in at 15.3% vs. 16.3% in 2QFY2011. Operational margins of all the three business segments got negatively impacted due to wage hikes given in 3QFy2011 of 10.5% to offshore employees and 2.5% to onsite employees.

Exhibit 10: Segment-wise utilisation

78 76 74 73 73 71 66 74 72 69 68 76 75 73 76 75

(%)

72 70 68 66 64

68 66

3QFY10

4QFY10 Application services

1QFY11 ITO services

2QFY11

3QFY11

BPO servics

Source: Company, Angel Research

Outlook and valuation

The HPs announcement of monetizing its PC business where Mphasis has no exposure and acquiring Autonomy to scale up its software capabilities present a possible opportunity to Mphasis as a subcontractor. However, continued sluggish performance of HP-ES business has begun to hurt Mphasis revenue from HP channel. Also HPs long-term direction towards having six worldwide offshore development centers, including India, may pose a threat to Mphasis volumes. The company managed to steer away the pricing re-negotiation round of May 2011 with no price cuts. The open billable positions in the application business declined from 1,000 to 825. However for the ITO business, it remained flat at 600. This highlights that growth in ITO remains intact and would continue to be the possible growth driver for the company. Going forward, management expects the direct channel (33% to revenue) and HP non-enterprise solution business (which is currently ~5% of revenue from HP channel) to drive growth, whereas the HP-ES business is expected to remain sluggish. We expect revenue growth to be muted at 2.7% yoy for FY2011E considering that in 1QFY2011 revenue run rate fell by 10% qoq as well as companys revenue for 2QFY2011 and 3QFY2011 were driven by one-offs. We expect the direct channel business to grow at 4% CQGR over 3QFY2011 4QFY2013E and HP channel to grow at 2% CQGR only. Hence we expect the company to record revenue CAGR of 10% over FY201113E. The management has indicated that cash balance of US$459mn could be used to do buyback of shares or acquisition. At CMP, the stock is trading at 10.9x FY2013 EPS of `36.4. We recommend an Accumulate on the stock with TP of `420, valuing it at 11.5x FY2013E EPS.

August 24, 2011

Mphasis | 3QFY2011 Result Update

Exhibit 11: One-year forward P/E

1,000 800 600

(`)
400 200 0

Aug-08

Aug-09

Aug-10

Nov-07

Nov-08

Nov-09

May-08

May-09

May-10

Nov-10

Price
Source: Company, Angel Research

15x

12x

9x

6x

Exhibit 12: Key assumptions

FY2012E Revenue growth USD (%) USD-INR rate (realised) Revenue growth-INR (%) EBITDA margin (%) Tax rate (%) EPS growth (%)
Source: Company, Angel Research

FY2013E

8.0 44.6 7.5 16.2 23.0 (12.5)

May-11
3x

10.4 44.0 8.0 15.3 23.0 7.9

Exhibit 13: Recommendation summary

Company 3iInfotech Educomp Everonn HCL Tech Hexaware Infosys Infotech Enterprises KPIT Cummins Mahindra Satyam Reco. Neutral Neutral Neutral Buy Buy Buy Buy Buy Buy Buy Accumulate Buy Buy Buy Buy Buy CMP (`) 27 207 417 371 71 2,250 119 149 67 358 396 46 301 963 650 330 Tgt. price (`) 578 88 3,200 145 206 89 445 420 69 424 1,368 783 419 Upside (%) 55.9 24.4 42.2 21.8 38.4 33.8 24.2 6.1 50.5 41.0 42.1 20.4 27.1 Target P/E (x) 14.0 11.5 20.0 9.0 12.0 12.0 11.0 11.5 10.0 11.0 22.0 9.0 16.0 FY2013 EBITDA (%) 21.5 45.6 38.5 17.9 15.1 30.6 16.1 16.1 15.0 13.3 14.5 13.8 19.5 28.9 17.0 18.7 FY2013E P/E (x) 2.3 4.3 7.0 9.0 9.2 14.1 7.3 8.8 9.0 8.9 10.9 6.6 7.8 15.5 7.5 12.6 FY2011-13E EPS CAGR (%) (4.3) 18.8 32.5 29.8 63.4 15.7 13.9 21.8 32.7 27.5 (2.8) 11.2 5.1 18.4 32.7 9.9 FY2013E RoCE (%) 12.0 11.1 13.9 18.1 16.8 24.7 15.2 20.6 11.6 16.9 12.5 12.4 16.6 30.2 14.6 13.8 FY2013E RoE (%) 15.1 15.3 17.1 23.8 17.8 22.7 13.4 17.7 13.8 15.4 13.6 16.6 15.4 31.3 21.2 19.8

MindTree Mphasis NIIT*

Persistent

TCS
Tech Mahindra

Wipro

Source: Company, Angel Research; Note: *Valued on SOTP basis

August 24, 2011

Aug-11

Feb-08

Feb-09

Feb-10

Feb-11

Mphasis | 3QFY2011 Result Update

Profit and Loss statement (Consolidated)

Y/E Oct (` cr) Net sales Cost of revenue % of net sales Gross profit % of net sales Selling and mktg. expenses % of net sales General and admin. exp. % of net sales Provision for doubtful debts EBITDA % of net sales Dep. and amortisation EBIT Interest income, net Other income, net Forex gain Profit before tax Provision for tax % of PBT PAT EPS (`) FY2009 4,271 2,690 63.0 1,581 37.0 179 4.2 266 6.2 1 1,135 26.6 202 933 3 16 29 980 64 6.5 916 43.4 FY2010 5,036 3,352 66.6 1,684 33.4 220 4.4 199 4.0 1,265 25.1 164 1,101 1 50 58 1,210 119 9.8 1,091 52.0 FY2011E 5,102 3,718 72.9 1,384 27.1 230 4.5 188 3.7 966 18.9 158 807 (0) 121 57 986 178 18.0 808 38.6 FY2012E 5,485 4,129 75.3 1,356 24.7 254 4.6 211 3.8 890 16.2 182 708 160 51 919 211 23.0 707 33.7 FY2013E 5,924 4,596 77.6 1,328 22.4 253 4.3 213 3.6 862 14.5 191 671 213 63 947 228 24.1 719 36.4

August 24, 2011

Mphasis | 3QFY2011 Result Update

Balance sheet (Consolidated)

Y/E Oct. (` cr) Liabilities Share capital Reserves and surplus ESOP outstanding Total shareholders funds Secured loans Unsecured loans Total debt Deferred tax liability Total liabilities Assets Gross block - Fixed assets Accumulated depreciation Net block Capital work-in-progress Goodwill Investments Deferred tax asset Current assets Debtors and unbilled rev. Cash and cash equivalents Interest receivable Loans and advances Total current assets Less:- current liabilities Less:- provisions Net current assets Total assets 906 179 724 1,809 641 273 894 2,349 1,205 178 945 2,329 809 350 1,170 3,345 1,216 378 1,117 2,711 804 263 1,644 4,073 1,292 600 1,195 3,087 792 248 2,047 4,683 1,396 972 1,173 3,541 838 280 2,423 5,348 1,004 688 316 13 295 761 70 1,026 784 242 9 389 1,460 75 1,216 942 274 20 405 1,640 90 1,391 1,124 266 20 405 1,850 95 1,566 1,315 250 20 405 2,150 100 210 2,135 1 2,345 3 3 2,349 210 3,088 1 3,299 45 45 3,345 210 3,816 1 4,026 46 46 4,073 210 4,426 1 4,637 46 46 4,683 210 5,091 1 5,302 46 46 5,348 FY2009 FY2010 FY2011E FY2012E FY2013E

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Mphasis | 3QFY2011 Result Update

Cash flow statement (Consolidated)

Y/E Oct. (` cr) Pre tax profit from operations Depreciation Pre tax cash from operations Other income/prior period ad Net cash from operations Tax Cash profits (Inc)/Dec in Current assets Current liabilities Net trade working capital Cashflow from operating actv. (Inc)/Dec in fixed assets (Inc)/Dec in intangibles (Inc)/Dec in deferred tax liab. (Inc)/Dec in investments Cashflow from investing actv. Inc/(Dec) in debt Inc/(Dec) in equity/premium Dividends Cashflow from financing actv. Cash generated/(utilised) Cash at start of the year Cash at end of the year FY2009 FY2010 FY2011E FY2012E FY2013E

965 202 1,167 16 1,183 (64) 1,118 (414) 322 (91) 1,027 (118) 1 (35) (761) (913) (2) 79 86 (9) 105 73 179

1,160 164 1,324 50 1,374 (119) 1,254 (520) 244 (275) 979 (86) (94) (6) (699) (884) 42 (39) 98 (95) (0) 179 178

865 158 1,023 121 1,144 (178) 966 (183) (92) (275) 692 (201) (16) (15) (180) (412) 1 18 98 (80) 200 178 378

758 182 941 160 1,101 (211) 890 (154) (27) (181) 709 (175) (5) (210) (390) 2 98 (97) 222 378 600

734 191 925 213 1,138 (228) 910 (82) 78 (4) 906 (175) (5) (300) (480) 44 98 (54) 372 600 972

August 24, 2011

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Mphasis | 3QFY2011 Result Update

Key ratios
Y/E Oct. Valuation ratio (x) P/E (on FDEPS) P/CEPS P/BVPS Dividend yield (%) EV/Sales EV/EBITDA EV/Total assets Per share data (`) EPS Cash EPS Dividend Book value Dupont analysis Tax retention ratio (PAT/PBT) Cost of debt (PBT/EBIT) EBIT margin (EBIT/Sales) Asset turnover ratio (Sales/Assets) Leverage ratio (Assets/Equity) Operating ROE Return ratios (%) RoCE (pre-tax) Angel RoIC RoE Turnover ratios (x) Asset turnover (fixed assets) Receivables days Payable days FY2009 FY2010 FY2011E FY2012E FY2013E

9.1 7.4 3.5 0.9 1.7 6.5 3.1 43.4 53.4 3.5 112 0.9 1.1 0.2 1.8 1.0 39.1 39.7 88.8 39.1 2.3 77 10

7.6 6.6 2.5 1.0 1.3 5.3 2.0 52.0 59.8 4.0 157 0.9 1.1 0.2 1.5 1.0 33.1 32.9 91.3 33.1 1.8 70 6

10.3 8.6 2.1 1.0 1.2 6.5 1.6 38.6 46.1 4.0 192 0.8 1.2 0.2 1.3 1.0 20.1 19.8 49.5 20.1 1.4 87 5

11.7 9.3 1.8 1.0 1.1 6.6 1.3 33.7 42.4 4.0 221 0.8 1.3 0.1 1.2 1.0 15.3 15.1 39.1 15.3 1.3 86 5

10.9 9.1 1.6 1.0 0.9 6.1 1.0 36.4 43.4 4.0 253 0.8 1.4 0.1 1.1 1.0 13.6 12.5 37.2 13.6 1.2 86 6

August 24, 2011

11

Mphasis | 3QFY2011 Result Update

Research Team Tel: 022 - 3935 7800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Mphasis No No No No

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

August 24, 2011

12