Mastek CEO Says Strong UK, Europe Growth Led By Data, AI Capabilities

Umang Nahata, the CEO of IT services company Mastek, has labelled Q4 FY 25 as a “modest quarter”. Nahata added that the company witnessed a “phenomenal revenue growth” in the UK and Europe and highlighted how his company faced “short-term uncertainties” in North America.

“I think it is a modest quarter. We had a good revenue uptick in the quarter; our UK and European businesses saw phenomenal revenue growth. Having said that, the North America business did face short-term uncertainties, which led to slowness in some of the businesses that we run there,” Umang Nahata told NDTV Profit.

Umang Nahata added that the revenue performance in Q4 was up by 4%. Speaking about the “exception loss” his company faced in the last quarter of the financial year, Nahata added, “Additionally, a one-time Rs 8 crore exceptional loss was recorded due to a change in accounting methods, adopting a more objective Expected Credit Loss (ECL) approach for provisioning unbilled revenues.”

In an exchange filing, the company announced that its net profit for Q4 FY25 declined 14.1% year-on-year to Rs 81.1 crore from Rs 94.41 crore in Q4 FY24. Total income increased 15.8% year-on-year to Rs 909 crore from Rs 785.18 crore in Q4 FY24.

Nahata said that the growth in the UK and European business was led by data and AI-led capabilities. “As we look at the bottom-line performance, the growth that we saw in our businesses was largely driven by data and AI-led capabilities, especially in our UK and Europe businesses. These are more frontending and secured resource kind of capabilities that we are currently getting into and delivering.”

He said Mastek is quite optimistic about the demand in core business. “I would say we feel very optimistic about demand in the core business, which is around the UK, Europe, and Oracle solutions, and we are upbeat about the growing penetration of data in our business. There is also a balance between how we see the macro in the North America business that we run,” he added.

Regarding the change in accounting method, Nahata clarified, “It's not that these receivables are not collectable, it's just that the accounting method change allows us to put up a higher provision than what we were putting up earlier, and therefore it's a one-time charge for the prior period.” 

The Mastek CEO acknowledged that the order backlog has seen a modest year-on-year growth of 1.7%, explaining that an additional $15 million worth of contracts that were in the commit stage have since been signed. Including these, the order backlog shows an effective growth of 7-8% year-on-year and 11-12% quarter-on-quarter. 

Nahata expressed optimism regarding the potential impact of the India-UK Free Trade Agreement (FTA), citing Mastek's strong relationships and focus within the UK government and healthcare sectors. He sees the company's higher exposure to the UK and moderate dependency on the US as currently playing to its strength.

For the US market in FY26, Mastek anticipates "early double-digit" growth, balancing factors such as potential funding holdbacks in the public sector and healthcare, which are key customer segments, with a strong demand for data and AI services from existing and new clients.

Regarding the recent volatility and weakness in the US dollar, Nahata said Mastek has adjusted its hedging strategy, reducing long-term hedges (three-to-four years) to focus on the short-to-medium term strategies due to uncertainty in future rates. 

“So far as the rates are concerned, we haven't seen any effects, a dollar-rupee kind of change that has made any important change in our rates today. We are closely observing, it's very uncertain and volatile. It's hard to make any change immediately because many of these contracts are longer-term in nature. We are currently not making any rate impact changes, but if this grows or continues to grow in that direction, then, yes, there would be a pricing impact,” he said.

Shares of Mastek closed 0.84% lower at Rs 2,310 on the NSE, while the benchmark Nifty50 ended 1.15% higher at 24,125.55 points.