MphasiS, the Bangalore-headquartered IT services company, has been reporting a sluggish trend in sales and profits for the last two quarters. The company earns more than two-thirds of its revenue from clients of its parent — HP. This business has not grown as expected in the last few quarters despite overall demand momentum. The frequent cut in billing rates is also a concern with the HP business. MphasiS has focused on growing its direct channel business, but the effort is yet to gain traction. The company's stock fell sharply in February after the dismal quarterly results. Its current stock level seems to have factored in the lower growth trajectory. Hence, a further drop in valuations looks limited. Investors may wait for another two quarters for signs of recovery in the company's performance.
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