Tech Mahindra out, Blackstone and Apollo in to acquire Mphasis

According to media reports Tech Mahindra is no longer contesting to acquire Hewlett-Packard's (HP’s) controlled IT service company Mphasis. HP has 60.4 per cent stake in Mphasis which it is looking to sell through this deal.

The pull out is probably for avoiding a bidding war with other contestants. Private equity firm Blackstone and Apollo Global Management have emerged as strong contestants to acquire Mphasis, and Tech Mahindra was the strong contestant before opting out.

Mphasis operates through segments that include Banking and Capital Market, Insurance, Information Technology, Communication and Entertainment and Emerging Industries. The company offers solutions that include Billing as a Service (BaaS), Digital Customer Experience, NextAngles, Protecht, Wyde and HyperGraf. The company is an insurance billing solution provider.

On financial front the consolidated net revenue from operations of Mphasis reached Rs 1517 crores in Q3FY16 compared to Rs 1557 crores in Q2FY16, a derease of 2.61 per cent Quarter on Quarter (QoQ). The EBITDA stands at Rs 217 crores this quarter, as compared to Rs 235 crores in Q2FY16, a decrease of 7.58 per cent QoQ. EBITDA margin this quarter stands at 14.29 per cent, as compared to 15.06 per cent in Q2FY16. The net profit stands at Rs 174 crores in Q3FY16 compared to Rs 185 crores in Q2FY16, a decrease of 6 per cent QoQ. 

On valuation basis the company is trading at Trailing Twelve Month (TTM) P/E of 13.66 compared to industry P/E of 21.05. The stock of company is trading at Rs 446.25, an increase of 0.42 per cent from the previous close.