Mphasis posts stronger earnings as AI deals drive wins

Mphasis reported stronger fourth-quarter earnings and higher annual deal wins, with a majority of new contracts tied to AI work.

Quarterly revenue rose 14.4% year on year, while earnings per share increased 13.7% to ₹26.7.

For the full year, revenue increased 11.6% on a reported basis and 6.7% in constant currency. New total contract value rose 68% to USD $2.1 billion, with 60% of those wins classified as AI-led.

In the fourth quarter, new total contract value reached USD $407 million, of which 64% was AI-led, indicating demand for AI-related work remained strong through the end of the year.

The figures suggest a shift in Mphasis's sales mix as clients spend more on AI projects rather than narrower automation work. The company has been building its position in sectors including banking, telecommunications and payments, where it disclosed several recent client wins.

Operating margin for the year was 15.3%, unchanged from a year earlier. Net margin before exceptional items slipped 10 basis points to 11.9%.

Quarterly profitability improved modestly. Operating margin in the quarter was 15.4%, up 20 basis points from the previous quarter and 10 basis points from a year earlier. Net margin before exceptional items was 12.0%, up 30 basis points quarter on quarter and flat year on year.

Annual results included an exceptional charge of INR 355 million linked to a change in labour laws. Earnings per share before exceptional items rose 10.4% over the year to INR 99.2.

The board recommended a dividend of INR 62 per share for the year.

AI emphasis

Mphasis linked part of its AI push to its acquisition of Theory and Practise, also known as TAP. Chief Executive Officer and Managing Director Nitin Rakesh said the deal supports a move towards AI systems that can work with business goals and sector-specific context.

He outlined that strategy alongside the earnings figures.

"We have delivered on our growth and margin guidance in FY26 and are stepping into FY27 with strong momentum driven by a healthy pipeline and TCV. Our AI-led propositions have gained traction, and we continue to double down on our AI efforts and strengthen the NeoIP TM suite. Our recent acquisition of Theory and Practise (TAP) creates a combination that allows us to move beyond task automation, towards systems that can reason over business objectives, constraints, and domain context, using AI at scale," said Nitin Rakesh, Chief Executive Officer and Managing Director, Mphasis.

Recent deal disclosures show how that strategy is playing out across client accounts. In one mandate, a telecommunications and technology company in the United States selected Mphasis for digital transformation and outsourcing work covering business and government customer operations.

Another contract came from a global bank, which engaged Mphasis for talent transformation in judgmental lending operations. The scope expands the firm's work from consumer cards into business cards and broader credit line increases with delegated decision authority.

A mid-size bank also chose Mphasis as a strategic partner to reshape payments operations and establish a payments centre of excellence. The assignment covers ACH, wires, cheques, foreign exchange and funds transfer processing, using Salesforce and AI.

Sector pressure

The results come as mid-tier technology services companies seek to show that AI spending is translating into revenue growth rather than internal productivity gains alone. Investors have been watching whether AI adoption would lead to larger contracts and stronger margins for outsourcing groups with deep exposure to banking and other regulated industries.

Mphasis's direct revenue grew 8.9% in US dollar terms for the full year and 9.6% in the fourth quarter. In constant currency, direct revenue rose 8.7% over the year and 9.2% in the quarter.

The company also highlighted a series of analyst mentions and rankings across infrastructure outsourcing, healthcare payer administration, software product engineering, private equity services, intelligent operations, digital workplace services and next-generation IT infrastructure.

For investors, the main focus is likely to remain on the quality of new bookings and whether AI-linked work can sustain recent deal momentum. With 60% of annual wins and nearly two-thirds of quarterly wins tied to AI, Mphasis is signalling that AI-related contracts are becoming a larger part of its business mix.