2 min read.Updated: 21 Oct 2021, 02:17 PM IST Edited By Asit Manohar
Mastek closed a large deal in Europe, which is expected to ramp up from Q4, providing revenue visibility, HDFC Securities report says
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Multibagger stock: Mastek shares are one of the multibagger stocks in 2021. This tech stock has been giving sharp upside movement since April 2020. In last one and half year, this Indian multinational technology company stock has shot up from around ₹212 per share levels to ₹2847 per share levels (today at 1:38 PM on NSE) — logging around 1240 per cent rise in this period.
However, HDFC Securities still sees more upside move in this technology counter despite soft second quarter results of the company. The brokerage report says that Mastek share price may go up to ₹3300 per share levels from current market price. Despite soft Q2FY22 results, this bullish estimate by the brokerage in regard to Mastek share price outlook is based on an expected recovery in the UK government business and ongoing turnaround in the US business.
The HDFC Securities report says, "We maintain a buy on Mastek, despite a soft Q2 (though in line with estimate), based on an expected recovery in the UK government business and ongoing turnaround in the US business. The softness in the quarter was mainly due to project completion in the NHS (health segment) and the contract awarding has been slow; excluding NHS, growth was around 9 per cent QoQ."
Highlighting the factors that may revive growth of Mastek, the brokerage said, " We expect the growth trajectory for Mastek to revive, based on (1) a strong footing in the UK government business; (2) cloud migration/transformation agenda, which is driving growth; (3) expected recovery in the NHS, based on deal wins; and (4) healthy recovery in the US geography and UK private segment."
HDFC Securities report went on to add, "Mastek closed a large deal in Europe, which is expected to ramp up from Q4, providing revenue visibility. The next phase of growth will be driven by US geography; the company is looking for an M&A for a head start. The EBIT margin was maintained but there will be headwinds due to planned investments, higher attrition, and an increase in freshers’ hiring."
On its suggestion to stock market investors in regard to Mastek shares; HDFC Securities report said, "Mastek is trading at a discount of around 36 per cent to the tier-2 IT average. We have cut our EPS estimate by 2-3 per cent and our target price of ₹3,300 is based on 24x Dec-23E EPS."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.