Mastek Reports Mixed Q3 Results

“Given a weaker than expected revenue growth trajectory, we turn cautious & expect a gradual topline growth recovery of 7 per cent/11 per cent YoY in FY27E/FY28E. We downgrade to 'hold' valuing it at revised multiple of 15 times P/E on FY28E EPS, with target price of Rs 2,380. We shall wait for any meaningful growth in both revenue and margins to turn constructive.”

“Management highlighted that a large part of the revenue miss was timing-related, with several programs scheduled to commence from Q4. It has guided to maintain margins in the band of 16.5-17 per cent. We model Ebitda margins at 15.7 per cent/16.3 per cent/16.5 per cent for FY26E/FY27E/FY28E.”

“The US leadership changes are over and with order bookings of $30 million, management believes the worst is behind. The UK government remains the key focus area and it is building AI led data engineering capability and delivering 15 per cent efficiency gains to clients.”

“Management expects growth to accelerate with an Ebitda margin target of 16.5-17 per cent. However, considering macro uncertainty, delayed ramp-ups, and AI-driven pricing pressure in select SGS accounts, we trim our FY27/28E EPS estimates by 3-5 per cent.”

“Geographically, revenue was UK-heavy, as it remains the key stabiliser amid seasonal weakness. North America and MEA faced the brunt of project timing and ramp shifts. Notably, execution discipline and AI-led efficiencies supported profitability. Q3 weakness is largely timing-driven rather than a pipeline deterioration.”