The Hindu Business Line : Order flow hopes propel Mastek

THE stock of Mumbai-based software solutions provider Mastek saw a record volumes, with over 1.5 times of the company's equity being traded on the bourses today. The rise in volumes and price was spurred by institutional buying on the back of an expected increase order inflow to the company from one of its largest UK-based client.

On the Bombay Stock Exchange (BSE), the stock closed 11.50 per cent higher at Rs 410.05 after touching an intra-day high of Rs 418.90. The counter saw volumes of 73.91 lakh shares on the BSE. On the National Stock Exchange (NSE), the share price closed at Rs 411.65 after touching an intra-day high of Rs 418.50, gaining by 11.78 per cent. On the NSE, 1.46 crore shares were traded.

The combined volumes (BSE and NSE) were 2.19 crore shares which work out to 1.57 times of the company's total outstanding shares of 1.3969 crore shares. If one compares the free float (non-promoter stake of 55 per cent), volumes were 2.85 times.

According to market sources, a large foreign institutional investor (FII) as well as two mutual funds were seen buying into the counter.

Sources said buying at Mastek's counter was triggered in the morning when the FII was rumoured to have bought around 3.5 lakh shares. This move was prompted by a note issued by a foreign brokerage firm to its clients mentioning a record increase in new orders bagged by one of Mastek's largest UK-based client, Capita Group Plc.

The note apparently carries a release from Capita Group, dated July 25, which says that Capita has won a record level on new contracts, valued at 1.1 billion pounds, in the first seven months of 2002 compared to 744 million pounds for 2001.

"Capita is one of the biggest business process outsourcing (BPO) companies and being the largest client for Mastek in the UK, a substantial increase in its order book would lead to an increase in the projects being outsourced to Mastek itself. Hence, markets see this development as an indication of a robust growth in Mastek's European business, which accounted for almost 50 per cent of its revenues last year," sources said.

Mastek has recorded a net profit for the year ended June 30, 2002 at Rs 38.23 crore compared to Rs 8.44 crore in the previous year. Total revenue for the year was Rs 288.09 crore (Rs 261.08 crore).

According to Mr Aman Chowhan, Analyst-Equities, Taib Securities Ltd: "At current level, the stock is attractively valued compared to other mid-cap stocks. And going forward, the company enjoys good growth prospects with improving business fundamentals."

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