- 19 Jul 2024
- ICICI Securities
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MASTEK: HEALTHY TOPLINE, ONE-OFFS IMPACT MARGINS
MASTEK - 2321 Change: -21.90 (-0.93 %)News: Mastek in Q1FY25 reported revenue of US$ 97.3 mn, up 3.8% QoQ /10.4% YoY (up 4.1% QoQ/9.9% YoY in CC terms) while in rupee terms revenue came at ₹812.9 crore, up 4.3% QoQ/12.1% YoY. Vertical wise all verticlas grew sequentially as well as on a YoY basis except Manufacturing (14% of mix) which declined by 5.8% QoQ/ 7.7% YoY. On a QoQ basis, growth among verticals was led by Healthcare (17.8% of mix) which grew by 16% followed by Government (43.1% of mix), Financial services (12.3% of mix) & Retail (12.8% of mix) which reported growth of 4.5%, 3.4% & 1.9% respectively. Geography wise UK & Europe (56.7% of mix) declined by 2.2% QoQ while US (25.6% of mix) and MEA (17.7% of mix) grew by 2.8% & 35.6% respectively. EBITDA margin of the company declined by ~90 bps QoQ to 15.2% due to higher other expenses (grew 4.1% QoQ) and higher employee expenses (grew 5.9% QoQ). It added 13 new clients while net employees declined by 76 bringing the total employee count to 5,546 and attrition increased by 40 bps QoQ to 20.9%. The company’s 12M order backlog remains flat sequentially at US$260.1 mn. The company declared final dividend of INR 12 per share.
Views: The company reported strong revenue growth in Q1 with a one time impact on margins however, the management remains confident in the revenue growth momentum on the back of strong order backlog and pipeline with a focus on EBITDA margin improvement aiming for 16.5-17% in H2 post addressing the one-time impacts of Q1. The company shall leverage its partnerships with NVIDIA, Microsoft and Oracle. The company has launched Project Nucleus which is an internal transformation program focused on automating & streamlining the order-to-cash lifecycle, aiming to improve productivity & generate savings for reinvestment in GenAI & client growth.
Impact: Neutral