Reduce Mastek; target of Rs 1800: HDFC Securities

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26 Aug, 2025 12:21

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HDFC Securities' research report on Mastek

Mastek reported a muted quarter; revenue growth of +3.1% QoQ CC was led by the integration of MST and organic growth was flat QoQ. The organic growth was impacted by NHS and US oracle portfolio offset by growth in UK private. The impact of NHS restructuring has been ~USD 25mn over the last nine months, with recovery taking longer than expected. Despite investments in the US, the recovery is taking longer than expected. Management expects synergy benefits from MST acquisition (Salesforce capability) which can lead to deal wins. It also expects a revival in the UK government spending, led by political stability and the completion of NHS restructuring. The order book improved by 5.3% QoQ CC to USD 206mn, indicating a revival in organic growth, provided revenue leakage from NHS and US oracle is over. The EBITDA margin will be in the range of 17-18% in the short to medium term, supported by operating levers like utilisation improvement reduction in sub-con.

Outlook

We cut our FY24/25E EPS by ~4/2% and maintain our REDUCE rating, considering growth challenges. Our TP of INR1,800 is based on 15x Sep-24E EPS.

For all recommendations report, click here

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Mastek - 18 -01-2023 - hdfc