Mastek hits a 40-month high
Mastek has hit a new 52-week high today at Rs.225.10 and currently remains at the same levels.
The stock hit a high after the Board of Directors at their meeting yesterday, gave the nod to go-ahead with the buyback of equity shares. The company plans to buy back up to 32 lakh equity shares of Rs,5 face value for an amount not exceeding Rs.54.50 crore or Rs.250/share. This will work out to 14.92% stake. Given the premium over the current market price, the market is naturally enthused. Its cash kitty as at 31st Dec stood at Rs.249 crore.
The midcap IT company posted a good set of numbers for Q3FY14 but its cautious outlook for the months ahead was a bit sobering. Its net profit came in at Rs.18 crore, up 22% (QoQ) but operating revenue growth was flat at Rs.240 crore, up 1.5% in rupee terms and 0.7% in constant currency. EBITDA came in at Rs.36 crore v/s 29 crore in Q2. It spent Rs.16 crore v/s Rs.14 crore (QoQ) on product R&D. It added 2 new clients during Q3 and its total client count as of 31st December 2013 was 123 (LTM). Its 12-month order backlog was Rs 513 crore ($ 83.0mn) as on 31st Dec’13 and in constant currency stood at Rs 515 crore ($82.5 mn) as compared to Rs 558 crore ($89.1mn) at the end of Q2FY14, reflecting a drop of 8.0% QoQ in rupee terms (drop of 7.5% QoQ in constant currency).
The total employee count stood at 3128 of which 2,370 employees were based offshore in India while the rest were at various onsite locations outside India. Its billable utilization stood at 81.2% during the quarter under review as compared to 81.5% in Q2FY14.
Looking ahead, the company has stated that due to the reprioritizing of the multi-vendor transformation program by a major North American customer, resulting in a slowdown in the program implementation, there will be impact on the revenues of Mastek. The drop in revenues would be approximately $2.4 million per quarter (based on December quarter revenues) until the program regains momentum and this is what will keep the stock price under pressure till the effect of this is assessed by the markets.