Any current/future new fundraising through debt or equity?

There is no mention of any new fundraising through debt or equity in the discussed pages. The company has borrowed USD 16.7 million during the quarter specifically for the BizAnalytica acquisition. The remaining acquisition amount was paid from internal cash accruals. Current borrowings stand at INR 477 crores as of September 30, 2023. The company has been focusing on paying down existing loans as per schedule, including dividend payments and loan installments. No indication of plans for future debt or equity fundraising provided in the disclosed information.

Any current/future capex/capital investment/strategic investment?

The document does not explicitly detail any specific current or future capex or strategic capital investments. However, Mastek is making significant investments in developing capabilities around Generative AI, including: - Training people. - Building specific solutions related to Generative AI. They are also investing in inorganic growth via acquisitions, such as BizAnalytica, which complements their data cloud business and overall value proposition. Investments are being made in platform partnerships with Salesforce, Snowflake, Oracle, and Microsoft to amplify go-to-market positioning. Th

Future growth expectations in sales/revenue/volumes?

Mastek aims for steady, double-digit year-on-year revenue growth in upcoming quarters, targeting a few percentage points above industry averages. U.S. business is on a strong growth trajectory with 5% quarter-on-quarter organic growth, surpassing USD 100 million run rate, and expected to continue momentum. Healthcare vertical in the U.S. is seen as a significant growth opportunity, potentially becoming a USD 100 million vertical in 3-4 years. U.K. public sector remains resilient with strong order booking and expected continued growth, particularly in central government and public sector. Inorg

Future growth expectations in earnings/operating earnings/profits/EPS?

Mastek aims for steady double-digit year-on-year revenue growth, targeting a few percentage points above industry growth. U.S. business, after achieving over USD 100 million run rate, is expected to sustain 5% quarter-on-quarter growth; margins targeted to reach double digits and gradually approach company average within 2-3 quarters. Operating EBITDA margins impacted by recent wage hikes and BizAnalytica integration; management plans to use operating levers like grade mix, subcontractor conversion to employees, and utilization improvement to restore margins. EBITDA margin target range is 17%

Current/ Expected Orderbook/ Pending Orders?

12-month order backlog grew approximately 13.4% year-on-year on a constant currency basis. In INR and USD terms, the order book growth is even higher. Order booking in the U.K. improved significantly, reflecting strong order book momentum. The U.K. order backlog grew 5.6% quarter-on-quarter and 22.3% year-on-year in INR terms. Steady growth is seen in both U.K. and U.S., with the U.K. order book better in Q2 and U.S. order book stronger in Q1. The order book proportion balances out over half-year periods relative to revenue. Average deal close time varies significantly from 1 month to 7 months

MastekQ2 FY24IT - Software

Mastek Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹1,474P/E: 10.4Market Cap: ₹4.6K CrSector: IT - Software

Management growth scorecard

Revenue

Category 3

Margin

Category 2

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

Mastek aims for steady, double-digit year-on-year revenue growth in upcoming quarters, targeting a few percentage points above industry averages.
U.S. business is on a strong growth trajectory with 5% quarter-on-quarter organic growth, surpassing USD 100 million run rate, and expected to continue momentum.
Healthcare vertical in the U.S. is seen as a significant growth opportunity, potentially becoming a USD 100 million vertical in 3-4 years.
U.K. public sector remains resilient with strong order booking and expected continued growth, particularly in central government and public sector.
Inorganic growth through acquisitions like BizAnalytica to contribute positively with margin improvements over time.
Growth drivers include expanded service portfolio, order backlog strength, and mining larger account deals.
Geographies like Middle East and selective European markets also expected to grow steadily.
Management cautiously optimistic given macro uncertainties but confident due to strong order book and enhanced capabilities.

Margin guidance

Category 2

Mastek aims for steady double-digit year-on-year revenue growth, targeting a few percentage points above industry growth.
U.S. business, after achieving over USD 100 million run rate, is expected to sustain 5% quarter-on-quarter growth; margins targeted to reach double digits and gradually approach company average within 2-3 quarters.
Operating EBITDA margins impacted by recent wage hikes and BizAnalytica integration; management plans to use operating levers like grade mix, subcontractor conversion to employees, and utilization improvement to restore margins.
EBITDA margin target range is 17% to 19%, with efforts to reach the upper end once operational efficiencies and U.S. growth stabilize.
One-time acquisition costs impacting current profitability will not recur, supporting PAT improvement next quarters.
Order backlog growth and strong deal pipeline in UK and US provide confidence for improved future profitability and earnings growth.

See what Mastek management said on margin guidance — free account, 30 seconds.

Fundraise plans

There is no mention of any new fundraising through debt or equity in the discussed pages.
The company has borrowed USD 16.7 million during the quarter specifically for the BizAnalytica acquisition.
The remaining acquisition amount was paid from internal cash accruals.
Current borrowings stand at INR 477 crores as of September 30, 2023.
The company has been focusing on paying down existing loans as per schedule, including dividend payments and loan installments.
No indication of plans for future debt or equity fundraising provided in the disclosed information.

Order book

Yes

12-month order backlog grew approximately 13.4% year-on-year on a constant currency basis.
In INR and USD terms, the order book growth is even higher.
Order booking in the U.K. improved significantly, reflecting strong order book momentum.
The U.K. order backlog grew 5.6% quarter-on-quarter and 22.3% year-on-year in INR terms.
Steady growth is seen in both U.K. and U.S., with the U.K. order book better in Q2 and U.S. order book stronger in Q1.
The order book proportion balances out over half-year periods relative to revenue.
Average deal close time varies significantly from 1 month to 7 months based on deal complexity.
The strong order book gives confidence for revenue growth in upcoming quarters.

See what Mastek management said on order book — free account, 30 seconds.

Capex plans

Yes

The document does not explicitly detail any specific current or future capex or strategic capital investments.
However, Mastek is making significant investments in developing capabilities around Generative AI, including:
- Training people.
- Building specific solutions related to Generative AI.
They are also investing in inorganic growth via acquisitions, such as BizAnalytica, which complements their data cloud business and overall value proposition.
Investments are being made in platform partnerships with Salesforce, Snowflake, Oracle, and Microsoft to amplify go-to-market positioning.
There is a focus on cost optimization initiatives to improve margins.
Given the emphasis on digital engineering, cloud transformation, and innovation, such as their Enterprise Workforce Scheduler platform, ongoing investments in technology and talent can be inferred.

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