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    Mastek Limited

    MASTEK
    Information Technology·17 Oct 2025
    Management Summary

    Mastek delivered a stable Q2 FY26 performance with operating revenue of INR 940 crores and an improved operational EBITDA margin of 15.5%. The company reported a 12-month order backlog of $280 million, reflecting healthy deal wins despite ongoing macro uncertainties. Strategic focus on AI-led efficiency and business transformation, alongside geographical leadership changes, positions Mastek for future growth, though decision-making delays and shorter contract durations remain a concern.

    Highlights

    5

    • Operating revenue grew 8.4% YoY and 2.8% QoQ to INR 940 crores, demonstrating stable performance despite macro uncertainties.

    • Operational EBITDA margin expanded by 50 bps QoQ to 15.5%, reaching INR 145.5 crores, driven by operational efficiency.

    • Net Profit increased 6% QoQ to INR 97.4 crores, with normalized YoY growth of 14% after adjusting for an exceptional gain in the base quarter.

    • The 12-month order backlog reached $280 million, showing healthy sequential growth of 2.2% and YoY growth of 6.8%, supported by significant deal wins.

    • Days Sales Outstanding (DSO) improved to 80 days, down from 82 days in Q1 and 95 days in Q2 last year, reflecting strong working capital discipline.

    Concerns

    3

    • Reported Net Profit declined 24% YoY due to an exceptional gain of INR 44 crores in the base quarter.

    • North America market continues to face macro uncertainties, leading to a 'right shift in demand' and slower growth than anticipated.

    • Macro uncertainties and client evaluation of AI's impact are causing decision-making delays and a preference for shorter-term contracts (1 year/6 months/1 quarter) over longer-term deals.

    Key financials

    Single quarter

    10 metrics
    1. 01Operating Revenue₹940 Cr+8.4%YoY
    2. 02Operating Revenue (CC Growth)—+0.2%QoQ
    3. 03Operational EBITDA₹145.5 Cr+1.7%YoY
    4. 04Operational EBITDA Margin15.5%+0.5%QoQ
    5. 05Net Profit₹97.4 Cr-24%YoY

    Order Book

    high confidence

    Total Value

    USD 280 million

    as of 2025-09-30

    quantified
    6.8% YoY2.2% QoQ

    Execution

    executable over the next 12 months

    "Healthy deal conversions and renewals across all geographies, especially U.K., supported the order backlog growth despite macro uncertainties."

    Source:
    Prepared remarks

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Cash ₹656 crores

    Cash and cash equivalents increased from INR 549 crores in Q1.

    Guidance & targets

    3
    CategoryTargetPriority
    Headcount
    CFO Joining
    early next month
    		High
    Revenue
    North America Revenue Growth
    $3 million to $4 million growth
    		Medium
    Margin
    North America EBIT Margin
    double digit or mid-double-digit
    		Medium

    What to watch in Q2 FY26

    5

    CFO Appointment

    next quarter
    CurrentCandidate expected early next month
    TargetCFO onboarded and participating in next earnings call

    Why it matters

    A new CFO is critical for leadership stability and strategic execution, especially given the current macro environment.

    We have a candidate who we are expecting to join early next month, and I'm pretty confident to have a partner with me on this call starting next quarter.

    Risks & concerns

    4
    RiskSeverity

    Continued Geopolitical and Macro Uncertainties

    These uncertainties are playing a role in client decision-making, leading to slower decisions and a preference for shorter-term contracts. — Management acknowledged

    medium

    North America Market Macro Uncertainties

    The North America market still has a lot of macro uncertainties, leading to a 'right shift in demand' and impacting growth. — Management acknowledged

    medium

    Client Evaluation of AI Impact on IT Roadmaps

    Clients are evaluating how AI will impact their IT roadmaps and budgets, leading to initial smaller, efficiency-focused projects before larger strategic deals. — Management acknowledged

    medium

    Potential Reduction in UK Government Spend

    Analyst raised concern about UK fiscal situation potentially leading to reduced spend, but management emphasized long-term trusted relationships and demonstrating AI-led efficiency. — Analyst downplayed

    low

    Q&A highlights

    8

    “As far as NHS is concerned, the NHS deal that got announced by one of our larger competitors, Mastek was not participating in that deal. It's a deal which was not a deal in our direct focus. And it does not impact any of our other businesses that we have with NHS across the various departments within the NHS that we work for.”

    Analyst probed on potential softness and vendor consolidation risks in UK, especially NHS, which management clarified was not impacting Mastek's direct business.

    asked by Amit Chandra

    2 min read5 chapters

    Detailed Narrative

    01

    Q2 FY26 Performance Overview

    Mastek reported a stable Q2 FY26 performance with operating revenue reaching INR 940 crores, marking an 8.4% year-on-year and 2.8% sequential growth, with constant currency growth at 0.2%. Operational EBITDA stood at INR 145.5 crores, translating to a 15.5% margin, a 50 basis points improvement quarter-on-quarter. Net profit for the quarter was INR 97.4 crores, up 6% sequentially, and a normalized 14% year-on-year growth after adjusting for an exceptional gain📎 of INR 44 crores in the base quarter. The 12-month order backlog grew to $280 million, reflecting 2.2% sequential and 6.8% year-on-year growth.

    02

    Geographical Performance and Strategic Focus

    The UK remains Mastek's strongest and largest geography, with continued strong demand in healthcare and secured government services, including a GBP 50 million-plus AI-led engineering services deal. North America is undergoing a leadership turnaround with Sourabh Mukherjee, aiming for $3-4 million growth and eventual double-digit EBIT margins, focusing on healthcare and life sciences. The APAC and Middle East business continues to focus on healthcare, securing a $7 million-plus deal and a $5 million-plus AI-led transformation deal, while improving profitability and DSO.

    03

    AI Strategy: Efficiency and Business Transformation

    Mastek's AI strategy is bifurcated into 'AI for tech' and 'AI for business'. 'AI for tech' focuses on delivering efficiency, speed, and quality in technology delivery, with a positive ROI-based approach for clients and internal operational efficiency. 'AI for business' aims for business transformation, with Mastek actively building AI for business transformation roadmaps for customers, anticipating execution in early FY27. The company is reinvesting efficiency gains into developing AI for business solutions.

    04

    Operational Efficiency and Balance Sheet Health

    Operational excellence and cost control contributed to a stable profitability, with the operational EBITDA margin improving to 15.5%. The company demonstrated strong working capital discipline, reducing Days Sales Outstanding (DSO) to 80 days from 82 days in Q1 and 95 days in Q2 last year. Mastek maintains a very strong and healthy balance sheet, with cash and cash equivalents standing at INR 656 crores, an increase from INR 549 crores in Q1.

    05

    Order Book Dynamics and Client Engagement

    The 12-month order backlog stands at $280 million, reflecting a 2.2% sequential and 6.8% year-on-year growth, driven by healthy deal conversions and renewals. Despite macro uncertainties, clients are increasingly evaluating AI's impact, leading to a preference for shorter-term contracts (1 year, 6 months, or 1 quarter) over longer 3-5 year deals. Mastek is actively engaging with clients to demonstrate tangible ROI from AI-led efficiencies, aiming to convert smaller projects into larger strategic deals.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.