At a Glance
Mastek isn’t your average midcap IT firm. With a 40-year history, it now builds digital platforms for governments, healthcare systems, and Fortune 500s. But after a dream run to ₹3,375 in 2023, the stock’s now languishing at ₹2,507. Are margins dying? Or is this the calm before another SaaS-style surge?
1️⃣ What’s Mastek’s Game? (Hint: Not Just Body Shopping)
Mastek has:
- 40+ years of legacy
- Clients across UK, US, Middle East
- Key verticals: Govt (UK NHS, HMRC), Retail, Healthcare, Financial Services
- Recent buzzword drop: ADOPT.AI platform launched in June 2025 to drive enterprise GenAI transformation 🧠💻
So it’s not Wipro-scale, but it’s also not a service desk sweatshop.
⚙️ Key Services:
- Digital transformation (Govt, BFSI)
- Application dev + legacy modernization
- Data engineering + BI
- Testing & Assurance
- Cybersecurity (recent NHS deal for training boards)
2️⃣ Financials: Decent Growth, Margin Woes 😬
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 1,722 | 2,184 | 2,563 | 3,055 | 3,455 |
| Net Profit (₹ Cr) | 252 | 333 | 310 | 311 | 376 |
| OPM (%) | 21% | 21% | 18% | 17% | 16% |
| ROCE (%) | 26% | 32% | 23% | 18% | 17% |
| EPS (₹) | 82.97 | 98.32 | 95.99 | 97.36 | 121.50 |
📉 Margins peaked in FY22
📉 Net profit CAGR (3Y): only 9%
📉 ROCE dropped from 32% → 17%
But:
✅ TTM PAT growth = 23%
✅ Revenue up 13% YoY
✅ FY25 dividend maintained (19% payout)
So it’s still profitable and consistent, just not exciting right now.
3️⃣ Quarterly Trends: Signs of a Plateau? 📉
| Quarter | Revenue (₹ Cr) | Net Profit (₹ Cr) | OPM (%) |
|---|---|---|---|
| Q1FY25 | 813 | 72 | 15% |
| Q2FY25 | 867 | 129 | 16% |
| Q3FY25 | 870 | 95 | 16% |
| Q4FY25 | 905 | 81 | 15% |
🛑 No real revenue acceleration
⚠️ Flat or declining profit QoQ
💸 CFO resigned in June 2025 = jitter alert
4️⃣ Valuation Check: Is ₹2,507 Cheap or Fair?
- FY25 EPS = ₹121.5
- CMP = ₹2,507
- P/E = 20.6
- Book Value = ₹796 → P/B ~3.15
- Dividend Yield = 0.76%
Peer comparison 👇
| Company | P/E | ROCE | FY25 PAT Growth |
|---|---|---|---|
| TCS | 25.7 | 64% | -1.7% |
| Infosys | 25.3 | 37.5% | -11.7% |
| Persistent | 68.2 | 31.4% | 25.5% |
| Mastek | 20.6 | 17.5% | 23.0% |
💡 So Mastek is:
- Cheaper than peers
- But delivering lower ROCE
- Still solid on growth… if it sustains
5️⃣ Recent News: AI Push + Management Jitters 🤖😬
🧠 June 2025: Launch of ADOPT.AI suite — helping clients integrate enterprise AI
🏥 June 2025: Wins £400,000 NHS contract for cybersecurity training
🧮 May 2025: Analyst meets to calm investor nerves
🚪 CFO Raghavendra Jha resigns (reason: “personal”) — replacement awaited
So they’re doing smart stuff, but market is in “show me execution” mode now.
6️⃣ Fair Value Range 🔍
Let’s project FY26 PAT ~₹440 Cr
Implied EPS ~₹142
Assign a fair P/E band:
| Case | P/E | FV |
|---|---|---|
| Bear | 15x | ₹2,130 |
| Base | 18x | ₹2,550 |
| Bull | 22x | ₹3,125 |
🎯 Fair Value Range: ₹2,130–₹3,125
📌 CMP = ₹2,507 → near middle of base-case band
If AI revenues kick in + margins recover, ₹3,000+ is possible.
If growth stalls or CFO exit spooks more investors, sub-₹2,200 possible.
7️⃣ EduInvesting Verdict 🎓
Mastek is not your typical IT midcap — it’s niche, profitable, and has NHS + Middle East clients most don’t.
But:
- Flat margins = no excitement
- Recent CFO exit = smoke?
- AI buzz exists, but execution TBD
This is a hold-for-quality stock, not a sprint-for-FOMO story.
Buy if you believe in enterprise AI + digital govt contracts. Avoid if you want multibagger fireworks this year.
✍️ Written by Prashant | 📅 June 26, 2025
Tags: Mastek, midcap IT stocks, digital transformation, NHS contracts, AI in IT, ADOPT.AI, PSU clients, EduInvesting, enterprise SaaS, India UK tech corridor
