After Paying Rs 19/Share Dividend, Mastek To Compensate Investors Again, Q3 This Week; 12% Upside Seen

Computer software and consulting firm, Mastek is all set to compensate investors with an interim dividend for FY24. The stock is in focus for its dividend announcement and Q3 earnings scheduled later this week. Master's Q3 expectations look favourable. While its share price is recommended to buy for a potential upside of nearly 12% ahead.

Mastek Share Price:

On Januar 15, Mastek shares ended at Rs 2,893.10 apiece, up by nearly 1% on BSE with a market cap of Rs 8,872.40 crore. The dividend-paying stock was near its 52-week high of Rs 2,950, and up by 96% from its 52-week low of Rs 1,475.45 apiece.

Mastek Interim Dividend:

In its regulatory filing, Mastek said "We wish to inform that at the Board Meeting scheduled to be held on Thursday, January 18, 2024, it is also proposed to consider declaration of interim dividend on equity shares of the Company, for the financial year 2023-24."

For the same, Mastek has fixed January 27 as the record date to ascertain the name of Members / Beneficial Owners entitled to receive the Interim Dividend on equity shares for the Financial Year 2023-24, if declared by the Board of Directors, at its meeting scheduled to be held on January 18, 2024.

Also, on Thursday, Mastek will declare its Q3 results for FY24.

Notably, the share price of Mastek will turn ex-dividend on the record date as well.

In FY23 alone, Mastek paid a hefty dividend of 380% valuing to Rs 19 per share.

Currently, it has a dividend yield of 0.66%.

Mastek Q3 Results Preview:

As per Anand Rathi, the following can be expected in Q3 from Mastek:

- Remain positive on US growth, which is also a key performance factor

- US growth (if fructifies) would also likely lead to higher company-level margins (beyond Q3)

- On track to reach $500m revenue by FY26. By then, diversification would also lead to lower volatility and valuation would converge with that of midcap IT stocks

- Master's returns were 57% in the last 12 months.

Mastek Share Price Target:

In the last week of December 2023, in its research note, leading brokerage Sharekhan said, "We interacted with Mastek Ltd's management to understand its growth prospects. The management highlighted that the US market, Data, Automation and AI service line and Healthcare vertical are set to grow above the company's average. While growth in US geography and Data, Automation and AI service line is anticipated to be aided by organic growth, account mining and growth from BizAnalytica, the healthcare vertical would ride on improvement in NHS account, pipeline deals and new opportunities. The company anticipates weakness in the NHS segment to bottom out. The weakness in NHS had impacted them in the last few quarters and had led them to be conservative on the NHS growth for FY24."

Despite delays in decision-making due to macroeconomic factors, Sharekhan's note said, "The company has ongoing deals and discussions on new opportunities such as API integration, CRM for patient portals, and areas like secondary care and arm's length bodies (ALBs) that could set the tone for stronger FY25 for the NHS. The company anticipates that the growth profile of the US will contribute to the recovery of its margin profile, and is aiming to achieve a 17-19% EBITDA margin in the upcoming quarters by using levers such as grade harmonization mix, pyramid, and subcontractor costs."

Hence, Sharekhan added, "We maintain Buy with a revised price target (PT) of Rs 3,235 (increase in PT reflects an increase in target multiple to22x) owing to possible improvement in NHS, strong order booking in the resilient UK public sector, coupled with strong US growth profile and account mining efforts which will offer stronger revenue visibility for FY25 and aid in industry-leading growth in addition to recovery in margin profile. At CMP, the stock trades at 23.8/18.8x its FY25/26E EPS."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.