Detailed Narrative
Q4 FY26 Performance and FY26 Overview
Mastek reported a stable Q4 FY26 with $103.5 million in revenue, a sequential increase of 1.4%. On a constant currency basis, revenue saw a marginal sequential growth of 0.3%. The company maintained a stable EBITDA performance at 16.1% despite a $1.1 million salary increase impact, aided by a 0.8% forex tailwind and cost efficiencies. For the full year FY26, revenue reached $421.2 million, up 3.1% YoY, with an EBITDA of 15.8%.
Order Backlog and Revenue Visibility
The 12-month order backlog closed at $300.4 million, reflecting a sequential growth of 1.5% and a YoY growth of 13.5% in USD terms. In INR terms, the YoY growth was 24.4%. This strong order book provides a robust foundation for FY27. Management expects the 12-month backlog to be executed within the next 12 months, indicating good revenue visibility.
Geographical and Sectoral Performance
The UK & Europe business grew approximately 11% in pound terms and 21.8% in INR terms for FY26, with UK healthcare growing 24% in dollar terms and over 90% in INR terms. North America experienced a 'reset' year in FY26 but has shown positive order book growth for two consecutive quarters, with expectations for a 'good growth year' in FY27. AMEA (APAC and Middle East) is stabilizing, with healthcare (Oracle Health) as a core focus, and is also expected to turn towards growth in FY27, despite short-term geopolitical headwinds🌐.
AI Strategy and Impact
Mastek added over 27 net new AI-focused customer projects in Q4 FY26, encompassing both AI for technology and AI for business programs. The company achieved a 12% increase in revenue per resource in FY26 due to AI-led efficiency. Management anticipates a shift from the traditional time-and-materials (T&M) model to more outcome-focused commercial models, leveraging AI to deliver tangible business outcomes and enhance productivity.
Capital Allocation and Shareholder Returns
The company generated ₹542 crores in operating cash flow for FY26, a 35% YoY increase, leading to cash and cash equivalents of ₹938 crores as of March 31, 2026. Mastek declared a final dividend of ₹16 per share, bringing the total dividend for FY26 to ₹24 per share, which is 480% of the face value. The Days Sales Outstanding (DSO) improved to 73 days, the lowest in 12 quarters, reflecting strong collection efforts.
Labor Code Impact and Financial Adjustments
In Q4 FY26, Mastek recognized an exceptional impact of ₹23.7 crores due to Labor Code changes, comprising ₹16 crores for gratuity and ₹7.7 crores for leave encashment. This was in addition to a ₹6.4 crore impact in Q3. The total FY26 impact of ₹30 crores had an approximate 0.8% effect on full-year PAT. A one-time📎 benefit from leave reversals in the UK and US led to a restatement of Q3 EBITDA from 16.1% to 16.8%.