Mastek (MASTEK) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 revenue grew 12.1% YoY to ₹812.9 crore (₹81,289 lakhs), with strong order book momentum and healthy pipeline across geographies.

• Operating EBITDA margin declined to 15.2% due to one-time provisions and delayed project commencements, with management expecting recovery in coming quarters.

• 12-month order backlog grew 23% YoY to ₹2,168.8 crore, indicating strong future revenue visibility.

• Strategic focus remains on U.S. healthcare, U.K. government, data & AI, and deepening relationships with top 30 accounts, which now contribute 57% of revenue.

• AI and GenAI initiatives, including new partnerships with NVIDIA, Microsoft, and AWS, are expected to drive differentiated growth.

Financial highlights

• Q1 revenue: ₹812.9 crore (₹81,289 lakhs), up 12.1% YoY and 4.3% QoQ; constant currency growth of 9.9% YoY and 4.1% QoQ.

• PAT for Q1FY25 was ₹71.5 crore (₹7,150 lakhs), down sequentially; adjusted PAT margin was 9.3% (normalized for acquisition-related costs).

• Operating EBITDA margin at 15.2%, down 80 bps QoQ and 226 bps YoY due to ramp-up costs and Middle East provisions.

• Gross cash at ₹383 crore (₹383.5 crore), down from ₹473 crore in March after annual bonus payouts; borrowings at ₹455 crore.

• DSO increased to 92 days from 89 days due to Middle East collections timing; LTM attrition at 20.9%; utilization net of leave at 86.5%.

Outlook and guidance

• Management expects to restore EBITDA margin to 16.5%-17% in H2 FY25, with continued top-line growth momentum.

• U.S. margins targeted to reach double digits in H2, with further improvement toward company average in FY26.

• No specific revenue growth guidance, but healthy order book and pipeline support high-teen growth expectations.

• U.K. government and NHS business expected to accelerate post-election, with green shoots in private sector.

• Deferred tax assets recognized in the USA due to expected future taxable profits from recent acquisitions and synergies.