MASTEK - Mastek

📊 NSE: MASTEK 🏢 Computers - Software - Medium / Small 📅 Last Updated: 12/14/2025 9:40

💰 Financial Performance

Revenue Growth by Segment

The Public Sector vertical is the largest contributor at ~41% of revenue, followed by Healthcare at ~17% and Retail/Financial services at ~15%. Consolidated revenue for FY25 reached INR 3,455.23 Cr, representing a 13.1% YoY increase from INR 3,054.79 Cr in FY24. Growth was driven by healthy momentum in the UK public sector and US healthcare segments.

Geographic Revenue Split

The UK and Europe region accounts for 56.9% of revenue (down from 68.0% in FY22), while the US market has grown to 27.2% (up from 16.7% in FY21). Other regions contribute the remaining balance. This shift reflects a strategic push to diversify away from UK public sector concentration through US-based acquisitions like MST Solutions and BizAnalytica.

Profitability Margins

Net Profit for FY25 was INR 375.93 Cr, a 20.9% increase YoY. Net margins improved due to cost efficiencies and a reversal of contingent consideration provisions for North America operations. However, operating margins in 9M FY23 had previously dipped to 17.8% from 21.2% in FY22 due to high wage inflation and attrition.

EBITDA Margin

Operating EBITDA for FY25 stood at INR 546.45 Cr, representing a margin of 15.8%, which is a 7% increase in absolute terms YoY. Total EBITDA (including other income) was INR 568.73 Cr, up 8% YoY. Margins are expected to stabilize between 16-17% in the medium term as acquisition synergies and cost optimizations offset wage pressures.

Capital Expenditure

Not explicitly disclosed as a single 'planned' figure, but the company invested $18.01 million (approx. INR 150 Cr) for the BizAnalytica acquisition in 2023 and has earnout/put-option liabilities totaling over INR 221 Cr due between FY23 and FY26.

Credit Rating & Borrowing

The company maintains a healthy credit profile with an ICRA 'Stable' outlook. Borrowing costs are influenced by an aggregate debt of ~INR 643 Cr as of September 30, 2024, which increased from INR 486 Cr in March 2024 to fund inorganic growth. Debt protection metrics remain comfortable with a gearing of 0.3 times.

⚙️ Operational Drivers

Raw Materials

Not applicable for IT services; the primary cost driver is Human Capital (Employee Expenses), which accounted for INR 1,859.03 Cr in FY25, representing 53.8% of total revenue.

Import Sources

Not applicable as Mastek is a service-based IT firm; however, talent is sourced globally with major delivery centers in India, the UK, and the US.

Key Suppliers

Not applicable for IT services. The company relies on technology partners like Oracle (Oracle suite and cloud migration) and Salesforce (via MST Solutions acquisition) for service delivery.

Capacity Expansion

Capacity is measured by headcount and order backlog. The 12-month order backlog stood at INR 2,067.6 Cr ($248.5 million) as of December 31, 2023, a 21.2% increase YoY, providing strong revenue visibility.

Raw Material Costs

Employee expenses (the 'raw material' of IT) rose 11% YoY to INR 1,859.03 Cr in FY25. Procurement strategy focuses on talent acquisition and retention in a highly competitive market to mitigate high attrition rates.

Manufacturing Efficiency

Measured by 'optimal resource utilization' and 'cost efficiencies' which supported the 21% growth in PAT for FY25. Utilization rates are managed to balance bench strength with project demands.

Logistics & Distribution

Not applicable for IT services; distribution is digital and global.

📈 Strategic Growth

Expected Growth Rate

10.60%

Growth Strategy

Growth will be achieved through geographic diversification, specifically increasing US market contribution (targeting a rise from the current 27.2%). The strategy includes integrating BizAnalytica for data/analytics capabilities, leveraging the INR 2,067.6 Cr order backlog, and mining existing clients in the UK Public Sector and Healthcare verticals.

Products & Services

Enterprise digital and cloud transformation services, Oracle suite and cloud migration, digital commerce, BI & analytics, application development, and agile consulting.

Brand Portfolio

Mastek, MST Solutions (a Mastek company), BizAnalytica (a Mastek company).

New Products/Services

Expansion into Cloud-native data services via BizAnalytica and enhanced Salesforce capabilities via MST Solutions, expected to drive the US revenue share higher.

Market Expansion

Targeting the US market to reduce UK dependency; US revenue contribution increased from 16.7% in FY21 to 27.2% in FY24.

Market Share & Ranking

Not disclosed in absolute %; however, noted as a 'prominent player' in the UK Public Sector IT services market.

Strategic Alliances

Strong partnerships with Oracle for cloud migration and Salesforce for digital transformation.

🌍 External Factors

Industry Trends

The industry is shifting toward cloud-native transformation and data analytics. Mastek is positioning itself as a specialist in 'Enterprise Digital Transformation' to move away from legacy maintenance and capture higher-margin consulting work.

Competitive Landscape

Faces stiff competition from large global IT service providers (e.g., TCS, Infosys, Accenture) which leads to constant pricing and margin pressure.

Competitive Moat

Durable advantage stems from a 30-year execution track record with the UK Government and NHS. This 'switching cost' and 'reputational moat' makes it difficult for competitors to displace them in critical public infrastructure projects.

Macro Economic Sensitivity

Highly sensitive to UK public spending budgets and global GDP growth which affects IT discretionary spending.

Consumer Behavior

Shift toward 'digital-first' and 'cloud-only' models in the public sector is driving demand for Mastek's core transformation services.

Geopolitical Risks

Changes in UK immigration laws and trade policies post-Brexit could impact talent mobility and service delivery costs.

⚖️ Regulatory & Governance

Industry Regulations

Subject to data protection laws (GDPR in UK/Europe) and immigration laws affecting H1-B/work visas. Compliance with SEBI Listing Regulations and the Companies Act 2013 is maintained.

Environmental Compliance

Direct exposure to environmental risk is 'not material' due to the service-oriented nature of the business.

Taxation Policy Impact

Effective tax obligations include INR 40.37 Cr in overseas jurisdictions and domestic corporate tax receivables of INR 22.07 Cr.

Legal Contingencies

Pending put-option liability of ~INR 121 Cr for Trans American Information Systems and earnout payments of ~INR 100 Cr over the next two years.

⚠️ Risk Analysis

Key Uncertainties

UK Government policy shifts on IT spending could impact up to 57% of revenue. Wage inflation and talent retention remain persistent risks to the 16-17% margin target.