Mastek drops after poor Q1 outcome

Mastek lost 1.71% to Rs 198 at 15:25 IST on BSE after consolidated net profit fell 92.03% to Rs 0.90 crore on 0.9% decline in total income to Rs 227.60 crore in Q1 June 2014 over Q4 March 2014.

The Q1 result was announced during market hours today, 24 July 2014.

Meanwhile, the S&P BSE Sensex was up 127.89 points or 0.49% at 26,275.22.

On BSE, so far 2.20 lakh shares were traded in the counter as against average daily volume of 46,000 shares in the past two weeks.

The stock hit a high of Rs 207.80 and a low of Rs 187.10 so far during the day.

Operating revenue declined 1.3% in rupee terms and rose 0.7% in constant currency terms at Rs 220.90 crore in Q1 June 2014 over Q4 March 2014.

Mastek's EBITDA declined 48.61% to Rs 9.30 crore in Q1 June 2014 over Q4 March 2014.

The drop in the operating revenue and EBITDA is directly related to the reassessment of project timelines of a North American client resulting in the restatement of revenues to the extent of Rs 10 crore, Mastek said in a statement.

Mastek's 12-month order backlog was Rs 549.80 crore ($91.4 million) as on 30 June 2014 and in constant currency stood at Rs 542.20 crore ($90.5 million) as compared to Rs 541.80 crore ($90.4 million) as on 31 March 2014, reflecting an increase of 1.5% QoQ in rupee terms (increase of 0.1% QoQ in constant currency), Mastek said in a statement.

Commenting on the company's financial performance, Mr. Sudhakar Ram, Group CEO & MD, Mastek said, "Although there has been an exceptional impact to the financials in the quarter, the business momentum remains intact with 8 new accounts added in the quarter. The UK geography has shown good improvement and we expect to announce few more deals in the coming quarter. The continued investment in the North America insurance market is expected to see conversions in the second half of the fiscal year".

Mr. Farid Kazani, Group CFO and Finance Director, Mastek said, "The quarter has been quite challenging on the financial front. The right shifting of the project milestones on a project has led to an impact of Rs 10 crore on the revenue and profits for the quarter. However, once the project is executed successfully within the revised timelines, the company will be able to realise profits out of the contingency held back on the said project in subsequent period".

Mastek is a publicly held leading IT player with global operations providing enterprise solutions to insurance, government, and financial services organizations worldwide.

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