5 days ago
Mastek Shares Jump as Brokerage Sees Turnaround Potential
Mastek is an information-technology company whose shares rose sharply after a brokerage saw signs of a possible turnaround.
Its revenue grew slightly from the previous quarter but was lower than a year earlier.
The company has more future work booked than it did last year.
The UK is its biggest market, and North America is viewed as a possible future growth engine.
Business in West Asia was weaker because of geopolitical problems.
Mastek is also winning more projects involving artificial intelligence.
However, competition may force the company to lower prices when contracts are renewed.
Anand Rathi kept its target price at ₹2,377 but warned about risks in the US and UK markets.
Mastek’s shares jumped 15% after Anand Rathi highlighted turnaround potential and retained its ₹2,377 target price.
First-quarter FY27 revenue rose 1.8% sequentially to $104.8 million but fell 3% year-on-year in constant-currency terms.
The 12-month order backlog increased 13.3% year-on-year to about $310 million, including a $25 million, five-year Salesforce Agentforce deal.
The UK contributed about 67% of revenue, while North America grew 2% sequentially and West Asia declined 7.9%.
Mastek reported more than 40 AI-led deal wins, but renewal pricing pressure could reach 20–25% amid intensifying competition.
- Who
- Mastek and Anand Rathi.
- What
- Mastek reported first-quarter FY27 results, while Anand Rathi assessed its performance, valuation and turnaround prospects.
- Where
- Mastek’s operations and markets in the UK, North America and West Asia.
- When
- The first quarter of FY27; no specific calendar date was provided.
- Why
- The brokerage sees improving order visibility, AI-led wins and potential North American growth, but also cited geopolitical, execution and pricing risks.
Turnaround and Growth Case
Risks and Constraints
Order visibility
Turnaround and Growth Case
Anand Rathi pointed to the 13.3% year-on-year increase in Mastek’s 12-month order backlog and the $25 million Salesforce Agentforce deal as positive signals.
Risks and Constraints
The brokerage noted that stronger order visibility still depends on execution, particularly in the US.
Regional outlook
Turnaround and Growth Case
North America grew sequentially and could become a growth engine if Mastek increases its quarterly revenue run rate beyond $28–30 million.
Risks and Constraints
The region’s current quarterly revenue is about $23 million, while West Asia declined 7.9% sequentially and remains affected by geopolitical pressures.
AI and pricing
Turnaround and Growth Case
More than 40 AI-led deal wins and 9.8% sequential growth in Data & AI services support Mastek’s growth strategy.
Risks and Constraints
Management expects renewal pricing pressure of about 15%, potentially rising to 20–25%, because of intensifying competition and AI-led deflation.
Key facts
- First-quarter revenue
- $104.8 million, up 1.8% sequentially and down 3% year-on-year in constant-currency terms.
- Operating EBITDA margin
- 15.4%, down 70 basis points sequentially but up 40 basis points year-on-year.
- 12-month order backlog
- Approximately $310 million, up 13.3% year-on-year.
- Largest market
- The UK, contributing about 67% of revenue.
- North America revenue share
- About 22% of revenue; quarterly revenue was approximately $23 million.
- AI-led business
- More than 40 AI-led deal wins; Data & AI services represented 13.4% of revenue and grew 9.8% sequentially.
- Brokerage target price
- Anand Rathi retained its ₹2,377 target price.
Sources
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