Mphasis Ltd. - a buying opportunity?

Yesterday morning, I noticed that Mphasis Ltd. had fallen by 29% on Friday due to some concerns on its "billing rates". More specifically, Hewlett-Packard which owns Mphasis, was getting "special billing rates" for itself. And HP provides close to 70% of revenues to Mphasis. Naturally, investors were aggrieved over Corporate Governance issues and gave a thumbs down and the share price tumbled to Rs. 448.

I immediately sensed an opportunity and did my analysis using the last 10 year data for Mphasis. It passed all my tests for financial soundness but failed on the valuation parameters, meaning it is "too pricey" for me. It is not within the Margin of Safety that I desire. But those who wish to take advantage of this sudden & huge fall might take a look because investors in India most often do not take their grievances on corporate governance through the whole routine - remember the Satyam scandal?

Invictus.


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