Mastek shares surge 13% post impressive Q4 results: Investment outlook?

Mastek shares surge 13% post impressive Q4 results: Investment outlook?

Mastek Shares Surge Over 13% after Q4 Earnings Beat Estimates

Mastek Ltd’s shares experienced a surge of more than 13% in Thursday’s trade, following the company’s Q4 earnings that exceeded analysts’ estimates. The March quarter saw a consolidated revenue increase of 7% on a sequential basis, amounting to ₹709.2 crore. Organic growth, a robust order book, and margin expansion were the main drivers behind the Q4 figures.

At 11:30 am, the stock was trading 13.46% higher at ₹1,800.85 per share. In the last five days, Mastek shares gained 11.04%, and in the last month, they increased by 10.16%.

Mastek’s constant currency revenue growth of 5.3% q-o-q was significant, exceeding estimates of 1.8% cc revenue growth. This was attributed to strong in-quarter execution and the demand for Digital Engineering, Experience, and Cloud Transformation services.

The company’s board also recommended a final dividend of 240%, or ₹12 per equity share for the fiscal year ending on March 31, 2023. The dividend will be paid within 30 days from the date of the Annual General Meeting.

Domestic brokerage house HDFC Securities recommends a ‘Add’ call, with a target price of ₹1,930 based on 15 times Dec-24E EPS, as the stock is trading at 14.6/11.7 times FY24/25E. However, Sharekhan believes the outlook for FY24 looks uncertain in the near term, and thus they maintain a ‘Hold’ rating on Mastek, with a revised target price of ₹1,740.

Mastek reported a strong quarter, with over 5% organic growth, beating HDFC Securities’ estimate. The UK geography is expected to continue driving growth, supported by a revival in tech spend across UK central departments, new deal wins from the Home Office, and investments in the UK private sector. The company has also implemented leadership changes in the US to revive growth, and the order book remains healthy. The EBITDA margin expanded in the quarter and is expected to remain in the range of 18-19% in the medium term.

About Mastek:

Operating across 40 countries, Mastek is an enterprise-level company focused on digital engineering and cloud transformation.

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