Mastek (MASTEK)

FairStock Score: 34/100 — RISKY

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• ROE of 21.43% and ROCE of 17.28% with D/E of only 0.15 show efficient and conservatively leveraged operations.
• Profit growth of 17.82% despite sales growth of 4.16% demonstrates margin discipline and operating leverage.
• P/E of 12.75 and PEG of 1.16 are reasonable for a double-digit profit grower.
• Piotroski F-Score of 7/9 points to solid financial health, while promoter holding of 35.77% aligns interests.
• Dividend yield of 1.45% provides modest income while waiting for value to be recognized.

Concerns

• Revenue growth is only 4.16%, so profit growth may not be durable unless top-line momentum improves.
• P/B of 6.00 against book value of ₹291.19 leaves little asset-based margin of safety.
• No clear economic moat is visible in the data; software consulting is intensely competitive.
• The stock is about 33% below its 52-week high, indicating possible market skepticism about future growth.

AI Analysis

As a value investor, I first ask whether I am buying a good business at a sensible price. Mastek earns a return on equity of 21.43% and a return on capital employed of 17.28%, while debt-to-equity is just 0.15. That is a financially sound, conservatively run software consulting firm. Profit growth of 17.82% is encouraging, but revenue growth of only 4.16% tells me the bottom line is being driven more by efficiency and margins than by strong top-line expansion. That is not a disqualifier, but it means I must watch whether growth can be sustained. At ₹1,746.10, the stock trades at 12.75 times earnings and 6.00 times book value. Book value is ₹291.19, so the market is paying a significant premium for the franchise. For a 21% ROE, some premium is deserved, but it reduces my margin of safety. The PEG ratio of 1.16 suggests the price is not demanding versus current profit growth, but I am cautious about extrapolating that growth when sales are barely moving. A dividend yield of 1.45% and promoter holding of 35.77% show shareholder alignment, and a Piotroski score of 7/9 indicates decent financial health. Still, software services is a competitive field, and I do not see an enduring moat in these figures. The stock is well below its 52-week high of ₹2,625, reminding me how sentiment can move. Overall, Mastek looks like a good, not great, business at a fair price. I would wait for stronger revenue acceleration or a cheaper price before committing capital.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer