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Mastek surges 11% on strong March quarter results

Healthy growth during the quarter was fueled by strong in-quarter execution and demand for Digital Engineering, Experience, and Cloud Transformation services.

Mastek

Mastek

SI Reporter Mumbai

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Shares of Mastek surged 11 per cent to Rs 1,758.70 on the BSE in Thursday’s intra-day trade after the company reported strong revenue growth in January-March quarter (Q4FY23), reporting constant currency (CC) growth of 5.3 per cent quarter-on-quarter (QoQ) while dollar revenue was up 7.8 per cent QoQ.

The IT services company recorded a 13.07 per cent sequential growth in consolidated profit at Rs 72.6 crore for Q4FY23. Revenue for the quarter grew by 7.7 per cent QoQ to Rs 709.2 crore with growth across operations. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margins increased 40 bps QoQ to 17.7 per cent.

The company said healthy growth during the quarter was fueled by strong in-quarter execution and demand for Digital Engineering, Experience, and Cloud Transformation services. Despite macro uncertainty, the company’s pipeline and order backlog across markets continues to grow, account mining is yielding results, the management said.

The company’s 12-month order back log increased by 4.1 per cent QoQ to $218.3 mn. It added 28 new clients while net employees declined by 65 bringing the total employee count to 5,622. LTM attrition of the company declined 230 bps QoQ to 21 per cent while on a YoY basis it declined 700 bps.

ICICI Securities said Mastek’s Q4 performance was aided by the UK market, especially from non-NHS side wherein they are witnessing strong deal momentum and execution in the areas of border security, biometrics solutions, etc while currency also helped the performance. The US market was weak due to a delay in deal execution and near term outlook is also not encouraging due to a delay in decision making visible across clients. The company made some leadership changes in the US region and is hopeful of a recovery in FY24.

The company is targeting industry leading growth in FY24 to be aided by broad base growth across markets (excluding UK NHS, where it has a cautious view for FY24). The company is comfortable with ~18 per cent EBITDA margin range currently as it likes to invest in the sales channel, which would restrict the immediate margin improvement but are hopeful of reaching 19-20 per cent in the medium term on cost optimisation levers, the brokerage firm said in a note.


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First Published: Apr 20 2023 | 11:03 AM IST

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