Mastek posts Q4 profit, beats full-year forecast

MUMBAI: Mastek has reported after market hours on Thursday a profit for the

April-June quarter, compared with a loss a year earlier, as it billed new

customers and contained costs.

It said it made a fourth-quarter net profit of Rs 169.5 million ($3.5

million) against a loss of Rs 32.6 million a year ago. Total income rose 31 per

cent to Rs 855.3 million.

"We have started implementing some of the projects we had got earlier

and we are containing costs," Ashank Desai, Mastek's chairman and managing

director, told Reuters. The group includes the Mumbai-listed Mastek Ltd. and

global subsidiaries. It also holds a 50.1 per cent stake in a joint venture with

Deloitte Consulting.

Mastek billed four new customers during the quarter and its European

operations, which contribute 63 per cent of its revenue, grew 10 per cent from

the preceding quarter. It said full-year net profit jumped 353 per cent to Rs

382.3 million, beating its forecast of 250 per cent growth. Total income grew 10

per cent to Rs 2.88 billion, at the upper end of its forecast range.

Its operating margin improved to 22 per cent from 12 per cent in the previous

year. For the current year, Mastek has forecast net profit, excluding its share

in a joint venture with Deloitte Consulting, to grow 35-45 per cent over the

previous year and revenue to increase by 38-44 per cent.

Including the joint venture, Mastek said it sees net profit rising 42-52 per

cent and revenue up 45-50 per cent. "We expect volume-led growth...margins

will remain the same," Desai said, adding prices are expected to remain

under pressure. Ahead of the results, Mastek's shares closed down seven per cent

at Rs 348.65 while the benchmark exchange index dropped 1.25 per cent.

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Desai said Mastek was trying to increase its presence in the United States
and had added five US clients in the fourth quarter. "The business with

these accounts is beginning on a modest size but with good growth

potential," he said.

Desai said Mastek, which is largely focused on the financial services sector,

saw revenue in that segment grow 15-20 per cent in the fourth quarter. The

company will increase software application development and maintenance services,

he said.

(C) Reuters Limited.