Mastek's profitability dwindled drastically in Q3FY16

Mastek declared its Q3FY16 results. The company's consolidated revenue increased by 4.74 per cent to Rs 137.79 crore in Q3FY16 on a quarterly basis. Its total expenditure increased by 7.88 per cent to Rs 137.57 crore in Q3FY16 as compared to previous quarter. Mastek's total expenditure rose mainly due to 14.25 per cent increment in other expenses.

Mastek's EBITDA decreased by 94.55 per cent to Rs 22 lakh in Q3FY16 as compared to previous quarter. The company's EBITDA margin contracted by 291 basis points to 0.16 per cent in Q3FY16 on quarterly basis. Its net profit also decreased by 70.3 per cent to Rs 79 lakh in Q3FY16 as compared to previous quarter. Mastek's net profit margin contracted by 267 basis points to 0.57 per cent in Q3FY16 on a quarterly basis. The company's profitability declined due to a heavy cost overrun pertaining to onsite security cleared resources that levied enormous losses on a particular project, amounting to Rs 7.7 crore for Q3FY16. Meanwhile, according to company, it has taken steps to reduce the onsite contractor staffing; and losses will start tapering down in coming quarters.

Mastek's total client count stood at 82; and added 6 new clients during Q3FY16. The company's 12-month order backlog was Rs 210 crore as on December 31,2015. It has headcount of 1302 and billable utilization at 81.7 per cent in Q3FY16.

On the vertical front revenue aspect, Mastek earned 57 per cent from Government; 16 per cent from other financial services; 15 per cent from retail services; and remaining 12 per cent from IT & other services during Q3FY16.

Taking an overview of nine months' result, Mastek's total income declined by 44.6 per cent to Rs 417 crore in 9MFY16, as compared to same review period in previous fiscal year. The company's EBITDA too decreased by 37 per cent to Rs 29.1 crore in 9MFY16 on a yearly basis. Its net profit also declined by 30.09 per cent to Rs 7.9 crore in 9MFY16 on a yearly basis as it incurred cost overrun of Rs 26.2 crore on onsite security cleared resources, during the period.

The share price of the company declined by 3.61 per cent on bourses in early trades and is trading at Rs 152.8 on intraday basis.

Mastek has various strategic business units such as North America operations; United Kingdom operations; and others. The company's other segments include operations of the Company in other parts of the world, including India. Its products include Direct Benefit Transfer System; Integrated Tax Administration System; E-municipality; Electronic Food and Civil supplies; and Kameleon. Mastek's offerings portfolio includes Business and Technology Services; Information Technology Consulting; Application Development; Systems Integration; Application Management Outsourcing; Testing; Data Warehousing and Business Intelligence; Application Security; Customer Relationship Management Services; and Legacy Modernization.