Mastek Q1: Profit Falls 24% To ₹71.5 Cr QoQ | NDTV Profit - video Dailymotion

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00:00Good morning and welcome to NDTV Profit. My name is Rucha Sumaiya and today we are going

00:10to discuss Mastec, which has come out with its first quarter FY25 earnings. Talking about

00:14the earnings, revenue was up around 4.5% while margins were largely flat at around 12.8%

00:21while net profit was down about 24% during the quarter. And we are being joined by the

00:27CFO Mr. Arun Agarwal to talk to us about the results. Hello and welcome to the show, sir.

00:32Thank you for joining us. What's your take on the results this time? Margin largely flat

00:37but revenue up about 4.5%.

00:39Thanks, Rucha for having me here. We are really happy with our quarterly performance. As we

00:45have stated in the past, our order book continues to grow while the macroeconomic environment

00:51challenges and the delay in decision making continues. But the strategic investments which

00:55we have made consistently over the last three years has started giving the results. The

01:00same is reflected into our consistent order backlog growth, which is $260 million as we

01:05speak, 23% growth year on year in INR terms. The same has started reflecting into our revenue

01:10growth. We have grown 4.3% in INR terms to be precise and 4.1% in constant currency quarter

01:16on quarter, which is really good growth in line with our expectation. On the margin side,

01:21EBIT is mostly flat. However, on the operating EBITDA side, we saw some dip, which is again,

01:26as you ramp the growth, there are certain costs which are associated from the timing when you

01:30start the project versus we have got the resources onboarded. There were some challenges from the

01:35timing perspective and also we had some period in the AMIA. More from the timing perspective,

01:40again, as you approved for them. From the business perspective, as we see, the revenue

01:44growth will continue to be there and also margin improvement will be there in line with our

01:48expectations. So, we are really confident and looking forward to quarter on quarter growth

01:53going ahead as well. So, sir, what kind of margins do you expect the company to achieve

01:57going ahead and what will be the key levers? As I mentioned, on an operating EBITDA basis,

02:04we have reported 15.2% this quarter and we track more operating EBITDA. This will continue to

02:11improve. We have stated that our objective is to trade in the range of 17% in the short term to

02:15medium term. However, it will take a quarter or two to come back to that level, but a part of 16%

02:21is the starting point and gradually in the coming quarters, we will move to 17% kind of a range.

02:27Okay. Right. I got that margin point, but let me move to order backlog. It has been around 2,100

02:36for the current quarter, but when I look at the past quarter also, the quarter four,

02:40it has been around the similar line. So, in terms of order book, was this quarter a little muted?

02:47Quarter one is always seasonally lower quarter. From the timing perspective, you book very strong

02:52order in quarter three, quarter four, because that sets you up for the next year growth, right? That

02:56was the focus. Quarter one, where the most of the renewal happens and some of the net new deals also

03:01gets closed. That's a pattern which we have seen in Mustang. So, we are really happy because whatever

03:05numbers we were planning, we have closed better than that, which has reflected into the numbers

03:10out there. So, from the market perspective, we don't see any challenge in the areas we are

03:14operating at, but yes, delay in decision making continues. The longer the cycles are there,

03:18discretionary spends are still under a lot of scrutiny. So, those patterns will continue,

03:22but there's a pattern which has immersed in terms of all the geographies where we are operating,

03:28the cloud deals where we are operating as well. We are getting good momentum building up there,

03:32which is reflected into our numbers. So, discretionary spends are still

03:37under pressure as what you mentioned. It's under a lot of scrutiny. Absolutely.

03:42The things are improving, the customers are becoming much more lighter, but scrutiny has

03:46not gone away. So, do you think the second half of the year will be better as US elections turn

03:51out and things be a little clearer? Will that be good for the company?

03:56We are looking ahead to it. The UK elections are over. We expect a lot of these will also

04:01start coming in the UK market because we have been very strong in that market as well.

04:05And US elections and as Fed starts cutting down the rates down the road, we believe a lot of

04:10momentum will build. We are also looking forward to that momentum building because

04:15all of those are going to help in terms of our revenue growth further on top of it.

04:20Okay. So, with that, let me just move on to the geography kind of bifurcation in terms of revenue.

04:26UK, Europe has been growing at a higher pace than the US. So, what kind of growth over here do you

04:32expect? Around 17% to 19% is what the aspirations were?

04:37That's a more medium to long-term aspiration. Obviously, it depends upon the market scenario.

04:42As we are operating more with a muted market, despite that, giving 4% growth is of a high

04:48confidence to us. But yes, if the market improves, then obviously the same will reflect into our

04:54ambition of delivering better than market growth in the coming period.

04:58Sure, sure. Thank you so much for joining us. I think we are out of time right now. A lot of

05:02questions, but we will definitely catch up with you over the next quarter. All the best for your

05:07earnings ahead and thank you for joining us.

Mastek Q1: Profit Falls 24% To ₹71.5 Cr QoQ | NDTV Profit

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