Mastek freezes at 20% upper circuit post March quarter earnings

Shares of Mastek were locked in 20 per cent upper circuit at Rs 346 on the BSE on Monday in an otherwise weak market after the company reported 36.1 per cent quarter on quarter (QoQ) growth in revenue in constant currency terms for the quarter ended March 2020 (Q4FY20). The company said its financials include acquisition of Evosys and, hence, are not comparable.

In comparison, the S&P BSE Sensex was down 2 per cent or 663 points at 33,117 at 11:40 am. A combined 223,000 shares changed hands and there were pending buy orders for 72,000 shares on the BSE and NSE.

The company’s EBITDA (earnings before interest, taxes, depreciation and amortization) margins improved 350 basis points to 17.3 per cent from 13.8 per cent in December 2019 quarter (Q3FY20).  Consolidated net profit increased by 50 per cent to Rs 38.90 crore, while total income grew 39.9 per cent at Rs 354.20 crore over the previous quarter.

The company said it added 24 new clients during the quarter. As on Q4FY20, 12 month order backlog was Rs 785.1 crore  as compared to Rs 471.0 crore in Q3FY20, reflecting a growth of 66.7 per cent in rupee terms and constant currency growth of 61.5 per cent on QoQ basis.

Analysts at ICICI Securities believe that organic revenues could have de-grown for the company. EBIT margin was at 15 per cent against 10 per cent in Q3FY20. Reported net profit increased 30 per cent QoQ to Rs 34 crore.

“While we await further clarity on the company's organic growth, we believe organic revenues may have witnessed a dip in the quarter. We expect revenues and margins to remain under pressure in the near term. However, all the negatives are factored in the stock price,” the brokerage firm said in a note.