Mastek net slumps on currency fluctuations, delayed orders

Mastek net slumps on currency fluctuations, delayed orders

Mumbai: Software services firm Mastek Ltd posted a 54.19% fall in net profit to Rs15.3 crore in Jan-March quarter, impacted by currency fluctuations and delayed orders, a top official said on Tuesday.

It had posted a net profit of Rs33.4 during the comparable quarter last year. Mastek posted revenues of Rs172 crore during the quarter, down 26.18%, from Rs233 crore recorded a year ago, it said in a statement.

“There were three or four reasons together. One-third of the drop was because of currency fluctuations during the quarter, because both the pound and the dollar declined," chairman and managing director Sudhakar Ram told Reuters over phone.

Without the currency impact, the company would have posted a net of Rs180 crore, he said. A delay in orders from existing customers in the US and a price cut on one large account also impacted, he added.

The slump is basically due to the company’s high exposure in Europe, and primarily UK. Its domestic revenues has “actually grown", while international and export revenues took a beating, Rahul Jain, an analyst with Angel Securities said.

“Apart from that, the company’s large exposure to insurance vertical, which has not recovered as a sector, would be a trigger," he added.

Brokerages were expecting Mastek’s revenues to be flat on pricing pressures and delay in revenues from new deals.

The rupee rose 3.8% against dollar and 10.20% against pound during the quarter.

Mastek’s operating margins rose to 15.9% during the quarter, on better cost control, higher utilisation and tight control on utilisation. The company has hedged $46 million and £11 million as on 31 March.

It also posted a forex gains of around Rs26crore.

Mastek’s order book for 12-month period ended 31 March was relatively stable in dollar terms, but lower in rupee terms. Due to adverse exchange rates, order book position stood at Rs279 crore from Rs296 crore in sequential quarter.

Ram said the firm would see “marginal improvement" in the order book postion for the next quarter, while real improvement would start from next financial year. Mastek follows a July-June fiscal.

Mastek intends to add 330 employees in June quarter, taking its total headcount 3,400.

The company, which had hiked wages in Feb. intends to go for another hike in July, he added.

Mastek has also earmarked around $40 million for acquistions, as it continues to scout for buys in government and insurance sectors. “There are candidates in the pipeline," he said.

Shares of Mastek closed lower by 7.29% to Rs329.15 in a Mumbai market which ended down 0.2%.