140% Payout: IT Stock To Trade Ex-Dividend This Week For Rs 7/Share; Buy?

Mastek is a mid-cap company in the IT industry, with a closing market value of Rs 8,581.70 Cr on Saturday. As a leader in enterprise digital and cloud transformation, Mastek serves clients in 40 nations, including the US, UK, Europe, Middle East, Asia Pacific, and India. This week, attention will be centred around the IT stock since it will trade ex-dividend on January 25, 2024 as per BSE, bringing with it a 140% payment at a face value of Rs 5 apiece.

Mastek Dividend

"The Board of Directors have declared an interim dividend of Rs. 7 (Rupees Seven) (i.e.140%) per Equity Share of the Company for the financial Year 2023-24. The said interim dividend shall be paid within 30 days to the equity shareholders of the Company, whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on the "Record Date"," said Mastek in a regulatory filing.
The company has fixed Saturday, January 27, 2024 as the record date for the purpose of the above-mentioned dividend. As per the data available on BSE, the ex-date for the purpose of dividend is falling on 25th January for the shares of Mastek.

Mastek Financials

The company reported a net income of Rs 787.6 Cr during the quarter ended on 31st December 2023 up by 18.5% YoY compared to Rs 664.7 Cr reported in the same quarter of the previous fiscal. Its revenue from operations stood at Rs 784.3 Cr during the quarter under review up by 19.1% YoY from Rs 658.7 Cr recorded in the year-ago quarter.
The IT company said its operating EBITDA reached Rs 133.5 Cr in Q3FY24 up by 17.4% YoY from Rs 113.7 Cr in Q3FY23. Its net profit reached Rs 77.7 Cr compared to Rs 67.1 Cr in the corresponding quarter of the previous fiscal, representing a growth of 15.8%.

In Q3FY24, the company brought on 27 new customers. There were 436 total active clients in Q3FY24 as opposed to 441 in Q2FY24. On December 31st, 2023, the 12-month order backlog was recorded at Rs 2,067.6 crore ($248.5 mn). This represents a growth of 21.2% in rupee terms and 16.5% in constant currency terms on a year-on-year basis, while in Q2FY24, the backlog was recorded at Rs 1,861.8 crore ($224.2 mn), displaying a growth of 11.1% in rupee terms and 8.5% in constant currency terms on a Q-o-Q basis. Attrition during the last twelve months was 20.0% in Q3FY24 compared to 19.1% in Q2FY24.

"Mastek reported revenues stood at $94 million, up 2.7%q-o-q/13.4% y-o-y in constant currency which was nearly in-line with our estimates of $94.6 million. Sequential revenue growth was led by growth in Health & Lifesciences and the Financial services vertical offset by weakness in Retail and Manufacturing verticals. Revenue from operations stood at Rs 784.3 crore, up 2.4% q-o-q/19.1% y-o-y. EBITDA margin improved 95 bps q-o-q to 17% led by operating levers improvement including utilisation and grade mix. Adjusted net profit stood at Rs. 75.3 crore, up 12.5% q-o-q/ up 17.4% y-o-y, beating our estimates at Rs 68.9 crore.

The 12-month order backlog stood at Rs 2,067.6 crore ($248.5 million), up 16.5% y-o-y in constant currency terms. The company added 27 new clients in Q3FY24. There were 436 active clients in Q3FY24 as compared to 441 in Q2FY24. LTM attrition rose 90bps to 20% from 19.1% in Q2FY24. Net headcount additions declined by 80 during the quarter taking the total headcount to 5518, out of which 3,889 were offshore.

Utilization net of leave improved 130 bps q-o-q to 85.4%. We believe the robust 12-month order backlog, resilient UK public sector business, NHS account recovery, strong US growth profile and account mining efforts to cross sell and upsell would aid the company in achieving industry leading growth," said the brokerage firm Sharekhan in a report.

Mastek Share Price Target

"The company reported decent performance in a seasonally weak quarter aided by Health& Lifesciences and Financial services verticals and Biz Analytica. The strong order backlog provides decent revenue visibility going forward. Further, we expect momentum to pick up in all geographies, UK public sector and US healthcare business as well as global healthcare as macro headwinds recede.

We expect Sales/PAT CAGR of 17%/20.3% over FY23-26E. Thus, we believe that the robust 12-month order backlog, resilient UK public sector business, NHS account recovery, strong US growth profile and account mining efforts to cross sell and upsell would aid the company in achieving industry leading growth. Hence, we maintain Buy with revised price target of Rs 3,300. At the CMP the stock trades at 23.4/19.3x its FY25/26E EPS," said the research analysts of Sharekhan in a note.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.