Mastek tanks 10% after net profit in June quarter dips 12% sequentially

Shares of Mastek slipped 10 per cent to Rs 412 on the BSE in intra-day deals on Tuesday after the company reported 12 per cent sequential declined in net profit at Rs 24 crore in its April-June quarter results for financial year 2019-20 (Q1FY20) on Monday.

Revenue from operation during the quarter under review dipped 7 per cent from Rs 247 crore to Rs 267 crore in March quarter.

The management said the reported quarter numbers were lower than expected, due to Brexit uncertainty. The company’s core UK market generates around 75 per cent of global revenue.

Unfortunately, Brexit uncertainty remains and will continue to dampen UK market conditions. The management sees this impact in a slowing of discretionary spend and delayed decision making, it believes.

“Demand from UK Government continues to remain strong and robust and we continue to grow quarter on quarter, however clients from the private sector are focusing more on stabilizing their business models, adjusting their spending plans to accommodate all scenarios which has consequently, resulted in a slowdown,” Mastek CEO John Owen said after result presentation.

At 10:05 am, the stock was trading 8 per cent lower at Rs 422 per share as against a 0.02 per cent rise in the benchmark S&P BSE Sensex.

So far in calendar year 2019, the stock has underperformed the frontline indices. The IT software firm’s stock has risen 0.7 per cent during the period under review relative to a 10 per cent gain in the BSE Sensex. The S&P BSE IT index, too, has risen 5.4 per cent during the same period.