Add Mastek, target price Rs 3,840: HDFC Securities

HDFC Securities has an add call on Mastek with a target price of Rs 3840. The current market price of Mastek Ltd. is Rs 2579.15. Mastek, incorporated in 1982, is a Small Cap company with a market cap of Rs 7982.92 crore) operating in IT Software sector.

Mastek's key products/revenue segments include I T Services for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 879.00 crore, up .75% from last quarter Total Income of Rs 872.43 crore and up 11.60% from last year same quarter Total Income of Rs 787.64 crore. The company has reported net profit after tax of Rs 94.71 crore in the latest quarter.

The company's top management includes Mr.Ashank Desai, Mr.Rajeev Kumar Grover, Mr.Ketan Mehta, Mr.Suresh Vaswani, Mr.Umang Nahata, Ms.Marilyn Jones. Company has Walker Chandiok & Co. LLP as its auditors. As on 31-12-2024, the company has a total of 3 Crore shares outstanding.

Investment Rationale
Mastek expects margin to be at ~17% and US margins will reach mid teens in FY26E. The overall growth outlook remains positive and will be driven by UK geography but focus on large deal limits scope for margin expansion. HDFC Securities maintains its revenue estimate and cut EPS estimate by ~2% for FY27E. They maintain an ADD rating with a target price of Rs 3,850, based on 24x FY27E EPS. The stock is trading at P/E of 21/17x based on FY26/27E EPS.

Promoter/FII Holdings
Promoters held 36.22 per cent stake in the company as of 31-Dec-2024, while FIIs owned 9.4 per cent, DIIs 9.27 per cent.