Mastek likely to end Q4 with 37% revenue growth

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Mastek likely to end Q4 with 37% revenue growth

Mastek has announced its third quarter numbers. It has posted net profit of Rs 35 crore for the quarter ended March 2008. Sudhakar Ram, CMD and CEO of Mastek, put across the Q4 revenue guidance at Rs 245-250 crore and Q4 profit guidance at Rs 37-38 crore. He sees order book at at Rs 400 crore by the end of Q4.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Mastek Q3 net profit at Rs 35 cr Mastek Q3 net seen up 6.5% at Rs 28.9 cr Don't expect big surprises from Yes Bk, Mastek nos ALSO READ See latest News about Mastek See previous management interviews See what other Experts & Brokerages are saying about Mastek Mastek BSE | NSE 28/05/12 Are Mutual Funds betting on Mastek?

Mastek has announced its third quarter numbers. It has posted net profit of Rs 35 crore for the quarter ended March 2008 as against Rs 27.1 crore in previous quarter. Its revenues stood at Rs 239 crore versus Rs 211.7 crore.

Sudhakar Ram , CMD and CEO of Mastek , said the Q4 revenue guidance is at Rs 245-250 crore and Q4 profit guidance is at Rs 37-38 crore. He sees order book at Rs 400 crore by the end of Q4.

The company is likely to end the quarter with a revenue growth of 37%. It plans to start buyback in the next two weeks.

Excerpts from CNBC-TV18's exclusive interview with Sudhakar Ram:

Q: Your numbers are well ahead of our expectations; could you take us through where the surprise might have come in from in terms of an operating bottomline?

A: The productivity improvement measures paid much better dividends than we had expected. So while we thought the profit at the bottomline will be about at Rs 29 crore, we got it up to Rs 34 crore on an organic basis. What was not guided at the beginning of the quarter was the STG acquisition which though happened in March, was announced in March. But the acquisition effective date was January 1, so STG contributed at least Rs 16 crore on the topline. The bottomline was not so significant, but the topline was a very significant achievement, which is how we managed to do a Rs 239 crore topline as compared to a guidance of Rs 220 crore to Rs 225 crore. What's really significant is the margin expansion at the EBDITA margin level was moved from around 17% to 19%, which was better than what we had expected and better than what we had guided. So the teams have done extremely well in terms of the bottomline performance.

Q: Now with this performance, and assuming that next quarter you will also include STG, could you give us some sense of what your full year 4th quarter earnings per share could shape up like?

A: Not at earnings per share level, but at the topline we are looking at somewhere close to USD 237 million to USD 230 million in terms of total year's revenue. And at the bottom line level, we may cross the Rs 120 crore mark, so it will be at Rs 123 crore for the year. So if you remember in the beginning of the year, we had guided a dollar growth rate of 35%, we will end up doing better than 35%, and we will be closer to maybe 37% or 38% in terms of growth, while the bottom line would have again grown by about 38% in rupee terms, despite the rupee appreciation.

Q: What kind of order book are you stepping into FY09 and how much of that will come in from STG?

A: Our FY09 will begin in July; right now we are still riding our 4th quarter. Since the year ends in June, so as the beginning of Q4, our orderbook is upward of Rs 400 crore, which is mainly the Mastek order backlog. It's a small contribution from STG, it has a rate of USD 16 million to USD 17 million, so their backlog would be in the region of about USD 8 million.

Q: You had talked about a buy-back plan somewhere around October; can you just update us on that front and what have you decided on that, what the price is going to be?

A: The quantum was already decided; we are allowed to buy back up to Rs 65 crore, which is a percentage of our net worth, we just appointed the merchant banker to go ahead with it. So in the next two weeks, we should actually start the buy-back.

Q: At the end of this year, how much of a total revenue and profit growth would have come from inorganic companies you have acquired than the current year?

A: We acquired two companies; one is Vector, which was on first of July. So I would pretty much consider that as part of our organics. Organic growth would be about between 33%-34%, and inorganic, which is the STG acquisition last month, would be another 4%-5% for this fiscal year.