The Hindu Business Line : JP Morgan freeze may hit MphasiS' revenue

A SLOWDOWN in project flows from JP Morgan Chase, one of the top two clients of MphasiS BFL group, is likely to squeeze revenue growth in near term, analysts said.

Software outsourcing to MphasiS is likely to stay cramped for sometime, following JP Morgan's merger issues with Bank One, they added.

JP Morgan, that accounts for over five per cent revenue to MphasiS, also has exposure to the call centre and business process outsourcing arm, MsourcE.

"It is a normal practice to put projects on hold when two entities are being merged," said an analyst with a domestic brokerage. As JP Morgan Chase is one among the largest clients of MphasiS BFL, there is bound to be certain impact on the earnings, he added.

However, another analyst with a foreign brokerage declined to hazard a guess on the business impact, even as he maintained, "The impact is not clearly visible. It is more of conjecture in nature."

It is believed that JP Morgan Chase has put the projects on hold for over last three months and the freeze is likely to continue for the next three to four months. MphasiS' Chief Financial Officer, Mr Ravi Ramu, did not offer any comments on this development.

JP Morgan Chase is buying out Bank One Corp for about $58 billion and the merger is expected to close in mid-2004. Apart from MphasiS BFL, Wipro Technologies and Cognizant are said to be the other vendors who service JP Morgan Chase. While MphasiS offers e-business solutions to this client, Wipro offers services around mainframe to JP Morgan Chase.

The impact of freeze on projects on Wipro and Cognizant is likely to be negligible because of their larger revenue base. Moreover, the contribution of JP Morgan account to Wipro and Cognizant was negligible, analysts said.

The MphasiS group expects its revenues to grow between 35 per cent and 40 per cent and profits to rise by 40 to 45 per cent in the current fiscal.