Buy Mastek; target of Rs 3,150: Sharekhan

Sharekhan is bullish on Mastek has recommended buy rating on the stock with a target price of Rs 3,150 in its research report dated July 19, 2024.

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July 22, 2024 / 13:34 IST

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26 Aug, 2025 12:21

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Sharekhan's research report on Mastek

Reported revenues stood at $97.3 million, up 4.1% q-o-q/9.9% y-o-y in constant currency (CC), beating our estimates of $95 million. EBITDA margin fell 80 bps q-o-q to 15.2% due to a delay in couple of project commencements and provision for aged receivables in Middle East, thus missing our estimates. The management expects top line momentum in Q1 to continue in the remaining quarters and aims to operate closer to a 16.5%-17% margin in H2FY25.

Outlook

The company reported decent performance in Q1FY25 with strong growth in topline, which is expected to continue over the remaining quarters. Although margins contracted in Q1, the company is aiming to operate closer to 16.5-17% in H2FY25 as deal momentum builds in. The 12 month order backlog remains strong and stable providing strong revenue visibility. We expect a sales/PAT CAGR of 17.3%/20.4% over FY24-26E. We believe the company is well-placed to achieve industry-leading growth, given the strong start to FY25 in term revenues and with management confident of sustaining similar growth momentum in the remaining quarters driven by the strong order backlog and expectation of deal momentum building up in H2FY25 . We maintain Buy with unchanged price target (PT) of Rs. 3,150. At CMP, the stock trades at 25.2/18.5x its FY25/26E EPS.

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