Mastek Limited reported a 13.2% year-on-year increase in total income and a 28.7% rise in net profit in rupee terms for the first quarter of FY26. The company's operating EBITDA grew by 10.8% year-on-year.
| Metric | Q1 FY26 | YoY Growth |
|---|---|---|
| Total Income (₹ crore) | 915 (approx.) | 13.2% |
| Net Profit (₹ crore) | 92.1 | 28.7% |
| Operating EBITDA Margin | 15% |
Financial Performance
Mastek's revenue grew by 12.5% year-on-year to nearly ₹915 crore, representing a sequential growth of 1% but a constant currency decline of 1.1%. The UK & Europe business was a significant driver, registering a 27% year-on-year growth in reported currency and 8% quarter-on-quarter growth. However, the US market faced headwinds, resulting in flat year-on-year numbers and an 8.5% quarter-on-quarter decline in dollar terms. The AMEA market experienced a revenue decline due to project closures, aligning with the company's focus on profitable growth in the region.
UKI and Europe Business
The UKI and Europe business demonstrated strong performance across all major sectors, with healthcare leading the growth, having grown by 25% to 26% quarter-on-quarter and more than quadrupled year-on-year. The enterprise business also showed green shoots, especially in the BFSI and data-led growth areas. Additionally, the secure government space contributed to growth with a large logo landed in December-January ramping up nicely. The Oracle business across UK & Europe registered a few good wins, indicating potential growth in the second half of the year.
US Market
The US market faced headwinds due to muted spending from major clients, resulting in flat year-on-year revenue and a quarter-on-quarter decline. However, order books grew by 25% quarter-on-quarter and year-on-year, and the pipeline remains robust. Key deals won during the quarter were primarily led by AI capabilities, particularly AI-led testing automation, resonating strongly with Oracle clientele.
Spending Review in UK
The new government in the UK has shown commitment to increased spending in digital and tech across departments, with a £3.25 billion transformation fund focused on public services, digital transformation, and AI-led initiatives. There is also a mandate for a 15% reduction in admin costs through automation and technology over the next 5 years. The NHS has received £10 billion over the next 5 years for digital, technology, and infrastructure improvement. The government aims to deliver £14 billion in savings through digital and AI by '28 and '29.
Headcount and Productivity
Mastek has seen a 13% reduction year-on-year in headcount and almost 5% quarter-on-quarter, driven by a combination of improved productivity and the nature of engagements. The company is focused on orienting its workforce towards the demands of the market, particularly in the security cleared landscape. While there has been a reduction in the offshore population, the UK geography has experienced a net headcount increase.
Order Backlog
The 12-month order backlog stood at $274 million, representing a 3.5% quarter-on-quarter growth and a 5.5% year-on-year growth. The company is going through extensions or renewals of some large engagements in the public sector in the UK, which are experiencing shorter renewal periods due to the spend review and budget approvals from the government.
