MphasiS, leading IT Services Company has reported that its QoQ net profit grew 2.5percent at Rs.198 crore.

It said that its consolidated revenues for the second quarter ended 30 April 2012 were at 1,329 crore, an increase of 5.7% compared to 1,257 crore in the preceding year.

Operating profits increased by 5.1% sequentially to 216 crore. EBIT margins expanded 120 bps in Q2 FY12 to 16.2% on the back of strong emphasis on cost rationalization over the last few quarters and productivity gains from the flattening of the delivery pyramid. Net profit for the quarter stood at 189 crore, up 2.5% sequentially. Strong focus on cost, productivity and quality of revenues has led to an overall improvement of 80 bps in profitability this quarter which rose to 14.3%. EPS for the quarter was 9.02 up 0.22 from the previous quarter.

Direct business revenues grew by 35.5% on a YoY basis, while declining 3.2% sequentially to 563 crore. Direct channel contributed to 42% of the total revenues in Q2 FY12, continuing the momentum of alleviating single client concentration risk. The Direct business saw a healthy addition of 14 new logos out of the 18 additions in the quarter.

“Our profit improvement is the key feature of the quarter. Combination of cost optimization and improved quality of revenue were the key drivers resulting in improved profitability. Our hyper specialization journey continues and that is generating higher quality pipeline. said Ganesh Ayyar, Chief Executive Officer, MphasiS.

Cash and cash equivalents increased by 157 crore during the quarter to reach 2,339 crore or 111 per share. DSO improved by eight days from the preceding quarter to 80 days.