Anand Rathi Research

Target: ₹2,240

CMP: ₹1,766.25

Notwithstanding macro and geopolitical headwinds, Mastek reported an in-line performance in Q4FY26, with CC revenue growing by 0.3 per cent q-o-q to $103.5 million and a robust 13.6 per cent y-o-y growth in 12-million order backlog.

As per the management, the company will see better growth in FY27 vs FY26, despite AI-led pricing pressure and macro uncertainty. The US saw sequential growth in order-book for the second quarter in a row.

Margin declined about 70 bps q-o-q due to full-quarter impact of wage hike, partly mitigated by forex tailwinds and improved operational efficiency.

Mastek added 27+ new AI-focused programmes in Q4, with the AI share of order-book rising from 3 per cent to 9 per cent over the last two quarters, though average deal-size remains small (about $1 million). However, AI is also driving significant pricing pressure on renewals (over 10-15 per cent discounts).

Mastek is pivoting the commercial model from T&M to fixed-bid, outcome-based contracts (about 40 per cent overall, about 55 per cent in North America). It guided about 16-16.5 per cent EBITDA margin for FY27 (vs. earlier guidance of 16.5-17 per cent), implying no margin expansion, as AI savings are offset by pricing pressure and reinvestment in AI capabilities.

Strategically, the company is pivoting towards AI-led, outcome-based engagements, accepting near-term volatility for long-term growth and wallet share gain. Hence, we retain BUY on the stock with a TP of ₹2,240, which implies ~28% upside from the CMP.

Published on April 21, 2026