Up 5.3% sequentially in constant currency, Mastek stunned Street with its Q4FY23 results, while its larger peers TCS and Infosys reported lacklustre figures for the quarter.

The small IT services company’s consolidated profit rose 13% quarter-on-quarter to Rs 72.6 crore, driven by higher revenue and operating income. Revenue for the quarter rose 7.7% quarter-on-quarter to Rs 709.2 crore. The operating margin improved to 15% from 14.3% in the previous quarter.

The stock was quoted at Rs 1,701 on the NSE at 9:30 am, up 7.2% from its previous close. Along with the entire IT package, Mastek has also been hit by recession fears, down 39% over the past year.

Management said that despite macroeconomic uncertainty, Mastek’s pipeline and order backlog continued to increase across countries, account mining was paying off, and it added 28 new customers during the quarter, bringing its total active customers to approximately 460.

Its 12-month order backlog stood at Rs 1,794.1 crore at the end of March compared to Rs 1,705.8 crore in December 2022.

In the December quarter, when its net profit fell 22% sequentially, analysts at foreign brokerage Macquarie said they expected an upturn in UK government trading and improved client mining.

This worked out in the March quarter. Some of Mastek’s top deals in the last quarter included a biometric residence permit (BRP) service for immigrants entering the UK and a back-office transformation programme for London local authorities.

It raised its FY24/25 EPS estimate by 3% and maintained its ADD rating on the stock with a target price of Rs 1,930. The stock currently trades at 17.61 times earnings.