'Buy' Mastek Shares Maintains HDFC Securities On Strong Growth Momentum In UK — Check New Target Price

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HDFC Securities Institutional Equities

Mastek Ltd. is positioning itself for its next phase of growth with a clear focus on its regional strength, particularly in the UK government (segmented government services and NHS), while simultaneously rebuilding its US and Asia Pacific, Middle East and Africa businesses. The company maintains a highly optimistic outlook for the UK-Europe region (~64% of revenue), targeting mid-teen growth, driven by strong momentum in digital healthcare initiatives, supported by the UK government’s ~£10 billion commitment (~£2 billion digital spends).

Healthcare has emerged as Mastek’s fastest-growing segment, further strengthened by its strong track record with the UK government contracts. Additionally, Mastek is aggressively pursuing new opportunities in Secured Government Services and expanding presence in departments such as the Home Office, HMRC, and Ministry of Defence.

In the U.S., the company is undergoing a significant restructuring with a new goto-market leader hired recently. The US recovery will be supported by AI and data engineering investments.

Margin recovery remains a key focus, with Mastek aiming to scale Ebitda margin back to 17% over the next two years, aided by pyramid optimization, revenue per employee improvements, and restructuring benefits.

We maintain our current estimates and expect the company to deliver a 12% revenue and 14% EPS CAGR over FY25-28E. We maintain Buy with a target price of Rs 3,240, based on 20x Sep 27E EPS.

The stock is trading at a P/E of 19x and 16x FY26/27E EPS

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