Q3FY21 Company Update - Mastek Ltd - ICICI Direct

Mastek's revenues increased 7.3% QoQ (in CC terms) and by 9.1% QoQ (in reported terms) to US$60.1 million. The increase in revenues was led by Evosys acquisition (up 10.5% QoQ) and 8.3% QoQ growth in organic revenues. EBIT margin expansion of 253 bps QoQ to 20.8% was mainly led by 40 bps expansion in gross margins and rationalisation of SG&A expenses. Mastek's 12-month order book was flat QoQ to US$129.6 million. Mastek has reduced debt by US$1.2 million (~Rs. 9 crore).

Valuation & Outlook

The company is seeing improved opportunity in multi-year deals led by integration of Evosys and Mastek's capability to offer end to end solution. This coupled with improving revenue trajectory in US private sector, UK public sector, inorganic expansion and market share gains are expected to drive the company's long term growth. However, recent run up in stock price and near term concern due to UK lockdown prompt us to be cautious on the stock. Hence, we downgrade the stock from BUY to HOLD with a revised target price of Rs. 1,310/share (15x PE on FY23E EPS) (earlier TP of Rs. 1350).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Mastek_CoUpdate_Feb21.pdf

Shares of MASTEK LTD. was last trading in BSE at Rs.1187.4 as compared to the previous close of Rs. 1156.4. The total number of shares traded during the day was 29156 in over 2381 trades.

The stock hit an intraday high of Rs. 1300.05 and intraday low of 1175. The net turnover during the day was Rs. 35432519.

Source : Equity Bulls

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