Europe, US orders push Mastek net up 35%

CORPORATE SCORECARD

Riding high on a good order-book position, Mastek group has reported a YoY increase of 35 per cent in net profit to touch Rs 21.8 crore for the October-December 2006 (second) quarter as compared with Rs 16.2 crore for the corresponding quarter in the previous year.

Its total income of Rs 209.8 crore for the second quarter has increased 35 per cent when compared with Rs 175.10 crore it achieved during the corresponding period last year. The figures are in line with the guidance it had provided in the last quarter.

The Rs 701 crore (July 2005-June 2006) IT company reported a sequential (QoQ) rise of 2.8 per cent in net profit and 5.5 per cent in total income.

The growth was driven by "continued robustness in the European operations that recorded a growth of 36 per cent and improved contribution from the US operations that posted a 24 per cent growth during the period," according to Sudhakar Ram, chief executive officer of Mastek.

During the quarter, revenues from European operations grew 8.2 per cent over the preceding quarter, while those from the US operations grew 5.4 per cent in the same period. The European market contributes 67 per cent and the US market contributes 17 per cent to the overall group revenue.

Mastek was able to strengthen its order book during the quarter under review. The group added four accounts in the insurance space, said Ram. It also strengthened its relationship with existing customers, obtaining new multi-million multi-year engagements ($4-5 million each).

"These achievements are reflected in the noticeable expansion of Mastek's order book that has grown from Rs 360 crore to Rs 405 crore at the end of the December 2006 quarter. The growing pipeline, with a considerable ramp-up in the insurance vertical, is expected to create a platform for long-term progressive performance," said Ram.

He added that billing rates for new contracts have been revised by 1-2 per cent.

The US operations were marked by new order wins from its existing anchor accounts. It won two large projects from Credit Union Insurance Company in the area of collateral protection insurance and a major infrastructure support engagement from a large portal provider.

It also continued to build up its qualified sales pipeline for the insurance vertical. Mastek Asia Pacific (MAP) secured a multi-million dollar order from a large Malaysian insurance group and a subsidiary of one of the top-three US insurance companies during the quarter.

Mastek's insurance vertical had a significant second quarter.