Mastek Q4 FY26: ₹2,849 Crore Order Book, 85 AI Deals, Yet Stock Trades at Just 12.7 PE
1. At a Glance
There are IT companies that keep shouting “AI, Cloud, Digital Transformation” like a motivational speaker who just discovered PowerPoint. Then there is Mastek.
Mastek is quietly sitting with a ₹2,849 crore order backlog, a UK government relationship stronger than some political marriages, and an AI pipeline that is suddenly looking very real. Yet the market is treating the company like some forgotten midcap IT stock lost between giant cousins like TCS and Infosys.
The numbers are not bad at all.
FY26 revenue came in at ₹3,698.8 crore, up 7% YoY. PAT came in at ₹404 crore, up 7.5%. EBITDA margin held at 15.8%. Order backlog jumped 24.4% YoY. Cash balance exploded to ₹938.5 crore.
And still, the stock is trading at just 12.7 times earnings.
That is lower than most IT peers, lower than the industry median PE of 22.7, and dramatically lower than companies like Persistent Systems, which is trading at nearly 48 times earnings.
Why?
Because investors do not fully trust the story yet.
Mastek depends heavily on the UK public sector and healthcare business. Around 57% of revenue still comes from UK and Europe. Top 5 clients contribute nearly 34% of revenue. Attrition remains high at 17.4%. Growth in the US has been patchy. Revenue growth has slowed from double digits to single digits.
This is a company standing at an interesting crossroads.
On one side, there is a pile of new AI-led contracts, Oracle partnerships, NHS wins, Home Office biometrics deals, and a growing US healthcare business.
On the other side, there is the fear that Mastek may remain permanently stuck as “that UK public sector IT vendor” which grows just enough to survive but never enough to excite the market.
The strange thing is management is not acting like a desperate company.
They are deliberately moving away from simple staff-augmentation work and toward long-term AI-led outcome-based contracts. They are accepting short-term revenue pressure in exchange for larger wallet share, longer contracts, and better margins.
That is a risky move.
But if it works, Mastek could become one of the few Indian midcap IT companies genuinely benefiting from the AI wave instead of merely putting “AI” into PowerPoint decks and hoping investors get emotional.
2. Introduction
Mastek is one of those old-school Indian IT companies that has survived multiple technology cycles.
It was founded in 1982, long before words like cloud, SaaS, GenAI, low-code, data modernization, or digital transformation became consultant jargon.
Back then, the business was simple: build software, maintain systems, bill clients, repeat.
Today, the company has transformed into a digital engineering, Oracle cloud, Salesforce consulting, data modernization, and AI-led transformation player.
The interesting thing is that Mastek is not trying to compete head-on with TCS or Infosys.
Instead, it focuses on specific verticals where it has deep expertise.
Government. Healthcare. Public sector. Oracle. Salesforce. UK institutions.
These are not glamorous businesses.
Nobody on social media gets excited about “public sector biometrics modernization.”
But these are sticky businesses.
Once a government department, hospital chain, or regulator starts using your systems, replacing you becomes painful, expensive, and politically risky.
That is why Mastek has managed to survive and grow for decades.
Its relationship with the UK government is especially important. The company has spent over three decades working with UK public sector clients. That experience is now becoming a moat.
In FY26, the company won:
A £49 million UK Home Office biometrics systems contract
An £85 million engineering framework contract for the UK Home Office ATLAS platform
A £15 million Financial Conduct Authority contract
Multiple NHS and healthcare contracts
This is not random project work.
This is deeply embedded public sector technology infrastructure.
At the same time, Mastek is trying to build a second growth engine in the US.
The company has been expanding through acquisitions like Evosys, MST Solutions, and BizAnalytica. These acquisitions gave it stronger Oracle, Salesforce, and data modernization capabilities.
Management is now openly saying that FY26 was a “reset year” and FY27 should be stronger.
That sounds optimistic.
But unlike some management teams who promise “hockey stick growth” every year, Mastek at least has a rising order backlog to support the story.
3. Business Model – WTF Do They Even Do?
Mastek basically helps large organizations upgrade their technology systems without everything catching fire.
Its services include:
Application development
Application maintenance
Testing and quality assurance
Oracle cloud implementation
Salesforce consulting
Data modernization
AI-led automation
Digital engineering
Legacy system modernization
The business is divided across four main service lines.
Service Line
Q4 FY26 Revenue Mix
Digital & Application Engineering
50.8%
Oracle Cloud & Enterprise Apps
27.2%
Data, Automation & AI
12.4%
Digital Commerce & Experience
9.6%
The most interesting part is Data, Automation & AI.
This segment has grown from just 7.2% of revenue in FY24 to 12.3% in FY26.
That means AI is slowly becoming real revenue instead of just a presentation slide.
The company says it closed more than 85 AI-related deals during FY26 and over 25 AI deals in Q4 alone.
Management also claims AI-led engineering can improve productivity by 15% to 80%.
Of course, every IT company says something similar these days.
But unlike some peers, Mastek is actually changing its commercial model.
Instead of billing clients based on hours worked, it is increasingly moving toward outcome-based contracts.
That means Mastek gets rewarded for delivering faster, cheaper, and more efficiently.
This is where AI can become powerful.
If the company can reduce delivery time and still charge based on business outcomes, margins can improve significantly.
But there is a catch.
Outcome-based contracts can create short-term revenue volatility.
Management openly admitted this in the January 2026 concall.
They are willing to sacrifice near-term top-line growth in exchange for bigger long-term contracts.
That is either very smart.
Or very dangerous.
4. Financials Overview
Since the latest official heading is annual FY26 audited results, full-year EPS should be used instead of quarterly annualisation.
Metric
Q4 FY26
Q4 FY25
Q3 FY26
Revenue
₹938 crore
₹905 crore
₹906 crore
EBITDA
₹151 crore
₹139 crore
₹152 crore
PAT
₹106 crore
₹81 crore
₹108 crore
EPS
₹34.0
₹26.0
₹34.7
The PAT growth is the real headline.
Revenue grew only 3.6% YoY, but PAT grew 30.9%.
That is the kind of operating leverage investors love.
The company also maintained EBITDA margin above 16%, despite wage hikes and labour code adjustments.
Full-year FY26 performance was:
Metric
FY26
FY25
Growth
Revenue
₹3,698.8 crore
₹3,455.2 crore
7.0%
EBITDA
₹585.6 crore
₹546.5 crore
7.2%
PAT
₹404 crore
₹375.9 crore
7.5%
EPS
₹129.5
₹120.7
7.3%
Not explosive.
But steady.
Very steady.
Like that boring student in class who never tops but always gets 85%.
5. Valuation Discussion – Fair Value Range Only
Current market price: ₹1,746
Current EPS: ₹130.3
P/E Method
At current PE of 12.7, the market is pricing Mastek as a low-growth, moderate-quality IT company.
If Mastek can sustain double-digit earnings growth and prove its AI strategy works, a PE rerating toward 15–18 times is possible.
One Response
excellent review