Shares of mid-sized IT company Mphasis rose about 2% on April 28, even as the company reported poor fourth-quarter results and missed Wall Street expectations.

The company’s net profit for the quarter ended March 2023 fell 1.7% year-on-year but 3.4% quarter-on-quarter to Rs 405 crore. Profits are expected to come in at Rs 411 crore, according to a CNBC TV-18 poll.

The company’s revenue fell 4.14% to Rs 3,361 crore from Rs 3,506 crore reported in the December 2022 quarter. The company’s revenue increased 2.5% year-on-year. On a constant currency (cc) basis, the company reported a revenue decline of 4.5% year-over-year and 3.1% sequentially.

“The macroeconomic environment remains uncertain as we seek alignment with our customers’ current priorities. Strategic technology spending may have slowed, but it is not on hold. Enterprises continue to invest in cloud, digital transformation and consolidation priorities. Institutionalizing the transformational projects has freed them up working capital,” said Nitin Rakesh, CEO and MD, Mphasis.

Earnings before interest and taxes (EBIT) fell 3.05% to Rs 575 crore from Rs 593 crore in Q3FY22. The EBIT margin was 17.11%, compared with a reported 16.92% for the December 2022 quarter. Deal wins are $309 million, compared to the fourth-quarter average of $338 million.

The board has also recommended a dividend of Rs 50 per share for FY23, subject to shareholder approval.

For its FY24 outlook, the company expects the pipeline going into FY24 to be led by cloud, transformation and consolidation. It saw weakness in the BFS (Banking and Financial Services) segment in Q1FY24. Rapid growth will likely be supported by expected strong sequential growth from Q2FY24 and YoY growth to Q4FY24. The company said the mortgage business is close to bottoming out and expects mortgage lending to stabilize through most of FY24.

It targets an operating (EBIT) margin range of 15.25-16.25% for all four quarters of FY24.

Mphasis’ market value has fallen more than 35% over the past year. The stock has 19 “buy,” 11 “hold”, and 6 “sell” calls, with an average 12-month price target of Rs 2,062.7, according to Bloomberg data.

Shares were trading 1.79% higher at Rs 1,816 on the NSE at 12:45 pm, while the benchmark Nifty IT traded 1.29% higher at 27,708.15.