MASTEK - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.8

• 📈 Revenue Growth: Quarterly PAT at ₹75.2 Cr vs ₹41.9 Cr previous, but YoY profit variation -4.11%
• 💰 Profit Margins: Moderate, ROE at 13.5% and ROCE at 15.5%
• ⚖️ Debt Ratio: Debt-to-equity at 0.01, virtually debt-free
• 💵 Cash Flows: EPS of ₹41.9, steady earnings base
• 📊 ROE/ROCE: Reasonable efficiency, but not industry-leading
• 📉 Valuation: P/E 36.3 vs Industry PE 26.4, trades at a premium
• 📚 Book Value: ₹260, P/B ~8.25
• 📈 PEG Ratio: 1.58, suggests valuation stretched relative to growth
• 💻 Business Model: IT services and digital transformation provider with focus on cloud, data, and enterprise solutions
• 🛡️ Competitive Advantage: Niche expertise in government and enterprise contracts, debt-free structure, and growing global footprint

Positive

• ✅ Debt-free balance sheet
• ✅ EPS of ₹41.9 supports valuation strength
• ✅ Institutional confidence with FII (+0.19%) and DII (+1.00%) inflows
• ✅ Diversified IT services portfolio across geographies

Limitation

• ⚠️ Quarterly profit variation negative (-4.11%)
• ⚠️ P/E ratio (36.3) above industry average (26.4)
• ⚠️ PEG ratio at 1.58 indicates stretched valuation
• ⚠️ RSI at 41.6 shows neutral-to-weak momentum

Company Negative News

• 📉 Profit growth slowing on YoY basis
• 📉 Valuation premium compared to industry peers

Company Positive News

• 🌍 Expansion in digital transformation and cloud services
• 💡 Strong quarterly PAT improvement vs previous quarter
• 📈 Institutional investor confidence with rising DII holdings

Industry

• 💹 Industry PE at 26.4, Mastek trades at a premium
• 📈 IT services sector supported by digital transformation demand and global outsourcing trends

Conclusion

Mastek shows moderate fundamentals with debt-free operations, steady EPS, and institutional support. However, valuations are stretched with high P/E and PEG ratios, and profit growth is slowing. Entry zone is attractive around ₹1,950–2,100 (close to 52-week low and DMA 50). Long-term holding is favorable if earnings growth resumes and digital transformation demand continues to expand globally.

Would you like me to extend this into a peer benchmarking overlay comparing Mastek with Coforge, Persistent Systems, and L&T Technology Services, or should we run a sector rotation scan to identify stronger compounding opportunities across IT services and digital transformation plays?