Home / Markets / Stock Markets /  HDFC Securities has 'Buy' rating on this multibagger IT stock post Q4 results
Listen to this article

Mastek reported a strong quarter with revenue and margin both coming in line. The order book improved 25.4% YoY, boosted by a $65 mn+ win from the UK government (home office), following a $60 mn NHS deal in Q3FY22. The management is aiming to reach $1 billion revenue in the next five years, implying an organic revenue CAGR of >20%. 

The IT stock is trading at a discount of around 34% to the mid-tier IT average. The brokerage has maintained its Buy rating on the Mastek shares with a target price of 3,530. The multibagger stock has rallied more than 103% in a year's period, whereas the IT stock is down about 7% in 2022 (year-to-date or YTD) so far.

“Mastek expects to achieve this growth, based on continued traction in the UK government business (around 10% wallet share); cloud migration/transformation agenda, which will drive Evosys growth; recovery in UK private; and turnaround in the US geography with focus on healthcare and life sciences vertical," the note stated.

The US geography will be a key focus area and investments will be made to strengthen the partner ecosystem. M&A will be a key pillar in US revival, with companies in the range of $30-40 mn as targets. The target EBITDA margin range is 19-20%; there could be near-term headwinds related to ongoing supply side concerns, HDFC Securities' note added. 

Mastek's FY22 revenue grew 26% from the year-ago period to 2,183 crore whereas Q4 revenue increased by 20% to 581 crore, while its net profit came at 88 crore during the January-March 2022 quarter.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout