Mphasis Snaps four-Day fall on upbeat Broker comments

Snapping a four-day losing streak, shares of Mphasis on Tuesday gained as much as 4 per cent in trade even as brokerages gave thumbs up to deal with PE Blackstone. On Monday, Blackstone bought a majority stake in the IT outsourcing services provider from Hewlett Packard Enterprise for up to $1.1 billion. 

The stock of Mphasis, which gained more than 11 per cent from the beginning of March till end of last week in anticipation of a deal, fell 3.7 per cent on Monday in continuation to its four day loosing streak.

In a note to its clients, Kotak Institutional Equities said, "The deal will provide Mphasis an opportunity to tap into Blackstone's portfolio of companies for IT work." Adding to the statement, they quoted further that, " the deal pricing terms and implications for profitability are not very clear."

IDFC Securities said a gradual re-rating in the stock following the deal is possible as it might increase growth visibility for the IT firm under the new promoters. The brokerage maintained its 'outperformer' rating on the stock with a target price of Rs 530.

The StarMine Intrinsic Valuation( SIV) model pegs fair value for the stock at Rs 662, which is above its prevailing price of Rs 460. 

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