Shares of Mastek Ltd. surged as much as 12% on Monday, July 21, despite a weak performance in the quarter gone by. The stock is among the top gainers on the BSE Smallcap Index.Mastek’s constant currency revenue growth during the quarter fell 1.1% on a sequential basis, after four quarters of positive growth. In the base quarter, constant currency revenue growth stood at 4.1%.
Margins for Mastek also declined for the third quarter in a row to 15% from 15.3% in the previous quarter and 15.25% during the same quarter last year.
So what has caused the stock to move higher?
Firstly, the company’s net profit increased by 13.5% on a sequential basis, although that was aided by higher other income.The company has healthy cash on its books, to the tune of ₹549 crore.
Margins for Mastek also declined for the third quarter in a row to 15% from 15.3% in the previous quarter and 15.25% during the same quarter last year.
So what has caused the stock to move higher?
Firstly, the company’s net profit increased by 13.5% on a sequential basis, although that was aided by higher other income.The company has healthy cash on its books, to the tune of ₹549 crore.
Third, Mastek’s core UK geography grew 9.6% on a sequential basis during the June quarter. The UK contributes to nearly 64% of the company’s overall topline.
Besides this, Mastek’s order wins remained healthy, increasing by 2.5% from the previous quarter and 8.3% from the same quarter last year.
The other big news is the India-UK Free Trade Agreement which will be signed this week and Prime Minister Narendra Modi is scheduled to visit the UK this week to preside over the signing of this deal.
Shares of Mastek are trading 11.6% higher on Monday at ₹2,782. The stock is closing in on its recent 52-week high of ₹3,375. Despite this upmove, the stock is still down 8% on a year-to-date basis.
