From Rs 1110 to Rs 2722: This midcap IT company turned multibagger in the past 1 year!

The company plans to double its revenue size over the next three years, including revenue contribution from the inorganic route.

Mid-size technology company, Mastek Limited has turned multibagger in the past year by delivering a return of 145.27 per cent to its shareholders. The stock closed at Rs 2,722.65 on February 10, 2022, from a low of Rs 1,110.05 on February 10, 2021, thus doubling investor wealth. 

Mastek is an IT company that provides enterprise solutions to the Government, retail sector and financial services. It is primarily present in the UK and European market with most of its revenues coming from this geography 

In Q3, Mastek reported in-line revenue growth of 3.7 per cent QoQ and 21 per cent YoY on a constant currency (CC) basis, led by strong growth in the healthcare and life sciences verticals, and cloud and enterprise apps service line. Operating margins contracted by 239 bps owing to investment in talent retention, lateral hiring and a decline in utilisation levels. PAT grew 2.3 per cent QoQ and 18.6 YoY to Rs 83.45 crore.  

The Covid-19 pandemic put into focus the need for business continuity, operational resilience and a switch to digital transactions which has led to increased demand for IT services. There has been a higher demand for cloud infrastructure services, an increase in specialised software, and new investments in transformation projects by clients, which has benefited IT companies such as Mastek.  

Mastek has created a consistent revenue stream from the UK Public sector over the last few years. It has a strong track record in the Government, health and retail verticals, and is well-placed to garner a share of the higher share of IT spending by the Home Office and Health in the UK. The UK’s software and IT Services (SITS) spend (public and private) is GBP 47 billion, of which the UK public sector’s spend is 25 per cent (GBP 12 billion).  

The management indicated that revenue growth momentum in the UK public sector would continue in the coming quarters on account of higher spending by the UK government sector and the addition of logos. The company plans to double its revenue size over the next three years, including revenue contribution from the inorganic route. These growth prospects of the company have led to a run-up in stock price over the last year. 

On Friday, the stock of Mastek closed at Rs 2698, down marginally by 0.91 per cent or Rs 24.65 per share on BSE. The 52-week high of the scrip is recorded at Rs 3,666 and the 52-week low at Rs 1,109.80 on the BSE.