Mastek jumps 11% on encouraging Q4 nos; firm declares final dividend of Rs 12/share

Mastek shares jumped 11 per cent on the BSE in the morning trade on April 20. The stock of the company surged as the software and consulting firm reported an encouraging set of numbers for the March quarter of the fiscal year 2022-23 (Q4FY23). At the time of writing this report, the stock was trading at Rs 1,755.75, up 10.79 per cent. In comparison, the benchmark S&P BSE Sensex was trading 0.08 per cent lower at 59,520 levels.

The company's dollar revenue came in at $86.3 million against $80.1 million in the previous quarter and  $77.2 million logged in the corresponding quarter of the previous fiscal. In rupee terms, the company's revenue stood at Rs 709.2 crore, up 7.7 per cent QoQ and 22 per cent YoY. Nirmal Bang Securities notes that the numbers were above their expectations.

EBITDA came in at Rs 125.5 crore, up 10.4 per cent QoQ and 4 per cent YoY while EBITDA margin stood at 17.7 per cent, up 17.3 per cent QoQ and 20.8 per cent YoY. 

Further, the company's profit rose by 13.1 per cent QoQ to Rs 72.6 crore. Mastek also announced a final dividend of Rs 12 per share.

Last year, the company announced the signing of a definitive agreement to acquire MST Solutions. MST Solutions is based in Chandler, Arizona, and is an independent Salesforce consulting partner in the Americas region. "MST is a trusted partner to several Fortune 1000 and large enterprise clients. MST has built a strong reputation for itself, especially in the Healthcare, Public Sector and Manufacturing Industry verticals," Mastek said in its press release.

Analysts at HDFC Securities said that the UK geography (~60% of revenue) will continue to drive Mastek's growth, supported by a revival in tech spend across UK central departments, new deal wins from the Home Office, revival in NHS (likely in H2FY24E) and investments in UK private sector.

"We increase our FY24/25E EPS by nearly 3 per cent, based on better growth and margins. The stock is trading at 14.6/11.7x FY24/25E. We have an ADD rating, with a target price of Rs 1,930 based on 15x Dec-24E EPS," the brokerage said in a report issued on April 20.