Mastek Ltd - Q2FY21 Company Update - ICICI Securities

Mastek's revenues increased 5.3% QoQ (in CC terms) and by 8.5% QoQ (in reported terms) to US$55.1 million. The increase in revenues was led by Evosys acquisition (up 8.8% QoQ) and 8.3% QoQ growth in organic revenues. EBIT margin expansion of 359 bps QoQ to 18.3% was mainly led by 140 bps expansion in gross margins and rationalisation of SG&A expenses. Mastek's 12-month order book improved 25.9% QoQ to US$127.5 million. The company has also added 37 new clients taking total to 542 clients. Mastek has reduced debt by ~Rs. 32 crore QoQ to Rs. 253 crore and declared a dividend of Rs. 5.5/share. The company sold its stake in Majesco (US) at US$32.3 million (~Rs. 235.8 crore) on October 19, 2020.

Valuation & Outlook

The company has a healthy order book and is witnessing an improving deal pipeline in the cloud. In addition, vendor consolidation in US retail, winning large multi-million annuity type of deals, access to larger market & deals via consortium, inorganic expansion and market share gains are expected to drive the company's long term growth. Further, stable margins and healthy balance sheet prompt us to remain positive on the stock. Hence, we maintain BUY with a revised target price of Rs. 1015/share (11x FY23E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Mastek_CoUpdate_Oct20.pdf

Shares of MASTEK LTD. was last trading in BSE at Rs.845.9 as compared to the previous close of Rs. 803. The total number of shares traded during the day was 49009 in over 3687 trades.

The stock hit an intraday high of Rs. 883.3 and intraday low of 837. The net turnover during the day was Rs. 42808704.

Source : Equity Bulls

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