Add Mastek, target price Rs 2300: HDFC Securities
Mastek with a target price of Rs 2300. The current market price of Mastek is Rs 2214.25.
Mastek, incorporated in the year 1982, is a Small Cap company (having a market cap of Rs 6739.88 Crore) operating in IT Software sector. Mastek key Products/Revenue Segments include I T Services for the year ending 31-Mar-2022.Financials For the quarter ended 30-06-2023, the company has reported a Consolidated Total Income of Rs 727.61 Crore, up 2.66 % from last quarter Total Income of Rs 708.77 Crore and up 22.08 % from last year same quarter Total Income of Rs 596.01 Crore.
Company has reported net profit after tax of Rs 73.53 Crore in latest quarter. Investment Rationale The acquisition of Bizanalytica (snowflake partner) will boost data cloud capabilities and strengthen US offerings. The order book was down 1.5% QoQ to USD 215mn but the US order book is ~1.5x of revenue.
The EBITDA margin declined in the quarter due to a wage hike in MST; the full wage hike impact will come in Q2FY24E. The desired EBITDA margin is ~18-19% in the medium term, supported by operating levers like utilisation improvement and reduction in sub-con.
The brokerage increases revenue estimates by 2.5/3.9% and EPS by -2.3/+2.0% for FY24/25E to factor in the acquisition and US acceleration. The stock is trading at 20.6/15.8x FY24/25E.Promoter/FII Holdings Promoters held 36.75 per cent stake in the company as of 31-Mar-2023, while FIIs owned 13.14 per cent, DIIs 4.8 per cent.
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