HDFC Securities has upgraded Mphasis to 'Buy' with target price of Rs 410 in its report.

Mphasis' 3QFY15 results were below our estimates on USD revenues. However, PAT was 3% above our estimates aided by higher other income.  Mphasis' revenue trajectory continues to remain on a downward spiral. HP channel (34.5% of total revenues) continued to remain weak (down 8.5% QoQ in USD). Management guided that the outlook for HP channel remains uncertain.

Commenting on the investment rationale, the stock broker said, ''Digital Risk revenues dropped by a whopping 33% QoQ and accounted for 10% of total revenues. However, management guided that the worst is behind in the Digital Risk business and guided for recovery from 4QFY15. Revenues from direct channel mature markets (ex-Digital Risk) which accounted for 46% of total revenues grew by 0.8% QoQ in USD for 3QFY15.

Net cash on balance sheet at Rs 20.9 billion (27% of Mcap) provides downside protection. Any strategic stake sale from HP could be a positive trigger. Post a 10% correction over the past three months, margin of safety appears to be favorable. Upgrade to Buy (earlier Neutral). Retain TP at Rs 410 a share.''

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