Mastek (MASTEK) Q4 03/04 earnings summary

Executive summary

• FY04 consolidated income reached Rs 4,108 million, up 8% YoY; net profit fell to Rs 290.5 million from Rs 503.1 million as operating costs, depreciation and selling expenses rose.

• Mission-critical IT delivery, insurance wins and a record Rs 2.7 billion opening order backlog supported FY05 growth expectations.

Financial highlights

• Consolidated income was Rs 41,084 lakh vs Rs 37,909 lakh; operating expenses were Rs 31,153 lakh vs Rs 26,839 lakh, and depreciation rose to Rs 2,275 lakh from Rs 1,400 lakh.

• Consolidated PBT was Rs 3,336 lakh vs Rs 5,707 lakh; PAT was Rs 2,905 lakh vs Rs 5,031 lakh, including Rs 177 lakh share of associate loss.

• Under US GAAP, revenue rose 6% to $79.7m; operating income fell to $2.1m from $8.8m and net income to $5.6m from $9.7m.

• Standalone income declined 9% to Rs 1,238 million; PAT fell 68% to Rs 122 million, reflecting lower subsidiary revenues, higher operating expenses and depreciation.

Outlook and guidance

• FY05 began with a record Rs 2.7bn order backlog; management expected growth momentum to continue, supported by global delivery and market penetration plans.

• NASSCOM projected Indian software and services exports growth of 30–32% in FY05, including 42% growth for ITES-BPO to $5.1bn; this is an industry forecast, not company guidance.

• Strategic priorities included complex multi-year IT projects, BFSI and insurance expertise, expanding annuity and BPO business, scalability and improved profitability.