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Mastek stock hit by disappointing result

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CIOL Bureau
New Update

MUMBAI: Shares of information technology firm Mastek Ltd. dropped to the

maximum permissible limit of 16 per cent in afternoon trade on Friday following

the firm's disappointing first quarter results, dealers said.

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Mastek's net profit rose 22.2 per cent to Rs 69.9 million in the three months

ended September 30, while total income grew 12.5 per cent to Rs 250.8 million.

Its shares were locked at the lower end of the price band at Rs 1,881.91

while the benchmark Bombay index was down 1.76 per cent at 3,781.25.

Analysts said the market expected software firms to post much higher profit

growth. Many firms have registered an average 70-80 per cent growth in recent

quarters. Sector leaders Infosys Technologies and Satyam Computer Services both

posted over 100 per cent growth in the quarter ended September 30.

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Analysts attributed Mastek's relatively poor performance to downsizing of an

order by a key client in April. "Recently, a key client of the company

downsized its order which has impacted both top and bottomline growth in the

first quarter," said Birla Sun Life software analyst Amit Khurana.

He said the company has taken initiatives to strengthen its presence in the

European markets, which should have a positive impact in the second quarter

results. Analysts expect the effect of this move to spillover to the second

quarter also.

"We continue to be positive on the company and will wait for the second

quarter results before taking a fresh view on the company," an analyst with

a domestic brokerage said.

Dealers said unwinding by traders had pushed the stock down on Friday.

"Funds have not pressed fresh sales in Friday trades. The stock is likely

to slip further as the result has not found favor with the market," a

dealer with institutional brokerage said.

(C) Reuters Limited 2000.

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