Mastek (MASTEK) Q4 01/02 earnings summary

Executive summary

• FY02 revenue rose 12% to Rs 2,926m and Group profit after tax reached Rs 415m, up over 400% despite the global slowdown. Strategic-account additions and cost containment supported performance.

• Strategic shift toward large accounts, offshore delivery and higher-value application development accompanied expansion of partnerships and complex project wins.

Financial highlights

• Group revenue was Rs 2,926m versus Rs 2,611m; PBT was Rs 522m versus Rs 177m and PAT Rs 415m versus Rs 79m.

• US GAAP Group revenue was Rs 2.8bn (US$58.5m); PBT Rs 492m and PAT Rs 413m after Rs 111m depreciation and interest.

• Standalone revenue rose 32% to Rs 1,124m; PBT before exceptional item and tax was Rs 422m and PAT Rs 290m, up 111%.

• Standalone results included a Rs 661.4m impairment of investment; excluding this item, PBT before exceptional item and tax was Rs 422m.

• International revenue was Rs 2,779m, up 11%, and represented 97% of Group income; domestic revenue was Rs 89m versus Rs 61m.

Outlook and guidance

• Three-year priorities: add strategic accounts, deepen existing relationships, scale practice-line frameworks and architecture, and increase offshore leverage through onsite-offshore delivery.

• Management expected latent demand for Indian IT services to improve when the US economy recovered; cost pressure was driving interest in offshore delivery, but client IT spending remained cautious.

• Continued focus on core application development and maintenance; directors were hopeful of improved performance barring unforeseen circumstances.

• Delivery capacity at the Deloitte Consulting joint venture was planned to expand through onsite and offshore resources; current-year Mahape facility occupancy was planned in phases, with 38,000 sq ft operational in H1 FY03.