Mphasis Q1: PAT +11% YoY lags 17.5% revenue as margins compress; $461M deal wins

Mphasis reported consolidated Q1 FY27 (quarter ended 30 June 2026) revenue of ₹4,384 Cr, up 17.5% YoY on a reported basis but a far more modest 8.3% in constant currency — the gap is rupee depreciation, not underlying demand (USD revenue +7.7% YoY, +2.1% QoQ in CC). Consolidated PAT was ₹489.5 Cr, up 10.8% YoY but down 3.9% sequentially. B S R & Co. issued an unmodified opinion; there were no exceptional items this quarter (the ₹354.77 Cr labour-law charge was an FY26 full-year item only). Profit growth trailed revenue because every margin line contracted: gross margin 26.9% (−200 bps YoY), operating margin 14.8% (−50 bps YoY) and net margin 11.2% (−60 bps YoY, −80 bps QoQ). Management points to new-deal ramp-up spend and utilization; the newly consolidated Theory and Practice (Continuum AI) acquisition alone dragged consolidated profit by ₹14.95 Cr. Growth was led by BFSI (segment revenue ₹2,303 Cr, +17% YoY) and Insurance (+33% YoY). New TCV wins totalled USD 461M with 63% AI-led, including one deal above $100M, feeding the pipeline into Q2. Against the Street the print was mixed: reported revenue was broadly in line, but EPS of ₹25.6 missed consensus near ₹27.77 as margins came under estimates — yet brokerages largely retained Buy and the company maintained its FY27 high-single to low-double-digit growth guidance. CEO Nitin Rakesh called it "a strong start" and guided to "further acceleration in sequential growth in Q2 FY27," confirming the confident tone from the Q3 FY26 concall, with margin recovery now the open question. One divergence to flag for readers: standalone PAT jumped 54% YoY to ₹459.2 Cr on revenue of ₹2,701 Cr (+20.7%) — a parent-entity artifact of intra-group flows, not the operating story; anchor on the consolidated +10.8%. Separately, the ₹62/share FY26 final dividend was approved at the AGM held the same day, and the board issued a comment on an exchange fine for a compliance lapse.