MASTEK - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.7

📊 Financial Overview

• Profitability: PAT at ₹75.2 Cr, slightly down QoQ; EPS at ₹41.9
• Margins: ROCE at 15.5% and ROE at 13.5% — moderate efficiency
• Debt Profile: Debt-to-equity ratio of 0.01 — virtually debt-free
• Dividend Yield: 1.07% — modest but consistent

📈 Valuation Metrics

• P/E Ratio: 36.3 — above industry average of 29.4, indicating premium pricing
• P/B Ratio: ~8.2 — high relative to book value ₹260
• PEG Ratio: 1.57 — suggests valuation is slightly ahead of growth
• Intrinsic Value: Estimated around ₹1,950–₹2,050 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: Mastek is a mid-cap IT services firm focused on digital transformation, cloud, and analytics
• Moat: Strong presence in government and healthcare verticals, especially in the UK and US
• Growth Drivers: Cloud migration, digital transformation, and AI-led services

📌 Entry Zone Recommendation

• Suggested Entry: ₹1,950–₹2,050 — near 52-week support and below DMA50
• Technical Indicators: RSI at 44.3 (neutral), MACD negative — short-term weakness

📈 Long-Term Holding Guidance

• Fundamentally sound with niche strengths in digital services
• Hold for long-term if accumulated near support; monitor margin trends and order book

✅ Positive

• Debt-free with consistent dividend payout
• Strong presence in digital transformation and cloud services
• FII and DII holdings increased

⚠️ Limitation

• Valuation slightly stretched (high P/E and PEG)
• QoQ profit decline of 4.11%
• MACD indicates short-term bearish trend

📰 Company Negative News

• Short-term margin pressure due to rising employee costs and offshore mix

🌟 Company Positive News

• Strong deal wins in UK public sector and US healthcare verticals
• Digital and cloud services continue to drive revenue growth

🏭 Industry

• IT services industry P/E at 29.4 — Mastek trades at a premium
• Sector driven by cloud adoption, AI integration, and digital transformation demand

🧾 Conclusion

• Mastek is a niche IT player with solid fundamentals and growth potential
• Accumulate on dips; suitable for long-term investors seeking mid-cap digital exposure