While Mphasis reported dismal fourth quarter earnings, with revenues flat at ₹1,517 crore and profits down 11 per cent at ₹151 crore sequentially, its performance in FY16 (2015-16) has been stellar.
Speaking to Bloomberg TV India, Mphasis CEO and Executive Director Ganesh Ayyar explains how the company has improved its performance for the full financial year FY16 and added $303 million to the total contract value, up 15 per cent over last year. Excerpts:
We always talk about our direct business. Let us break it down into two big parts. The first one is the Direct Core. And if we look at the full year FY16 performance, Direct Core, which constitutes 72 per cent of our direct international revenue, grew 19.5 per cent. And if we look at the fourth quarter, it grew by 27.2 per cent over the same quarter last year. So this is clearly a crown jewel and it has done exceedingly well, growing much faster than the market.
And the second part is Digital Risk, which contributes 22 per cent of the overall direct international business. Digital Risk grew 32.7 per cent in FY16. And in Q4, it grew 26.9 per cent over the same quarter last year.
On new wins in the direct international space, we added $303 million to the total contract value (TCV) and that is roughly 15 per cent growth over last year with 55 per cent of the TCV coming from next generation digital and GRC (governance, risk and compliance) business. So it has been a stellar performance for direct, and even in Q4 the growth has been phenomenal.
What you are seeing sequentially, you have to view it in the context of seasonality. So while seasonal may look quite muted where direct international grew by 1.6 per cent, when you peel the onion you realise that Q4 has been good for us in both revenue and profitability terms. Overall, the company has done very well. Our operating profit has improved significantly.
When I look ahead, we are now guiding for 100 basis points profit improvement in terms of the band. Earlier, we had said we will operate between 13-15 per cent. Now we are saying that we will operate between 14-16 per cent. So it has been one of the best years we have had, and it has set a very solid foundation for FY17.
What’s the outlook as far as the direct international revenues are concerned?
I can’t tell you precise numbers. I suffice to say that we will grow faster than the market for the Direct Core.