Mastek's 16.53% margin trails IT peer median as other income lifts profit
Management cited annual increments as a drag on EBITDA, while AI deals rose to 53 and all geographies grew sequentially in constant currency.
Filed 23 Oct 2026, 16:09 IST · after market close · Mastek Ltd (MASTEK)
Key takeaways
- Standalone operating margin was 16.53%, 2.93 percentage points below the 19.46% median for 16 reported IT peers.
- Other income of Rs 55.39 cr was a substantial contributor to profit before tax of Rs 85.64 cr, making reported net profit quality an important focus.
- Management said Mastek signed 53 AI deals in Q2, up from 43 in the previous quarter, with Financial Services revenue growth of 16.4% sequentially.
Price around the results
Profit includes a sizeable other-income contribution
Mastek reported standalone operating profit of Rs 39.26 cr on revenue of Rs 237.52 cr, while net profit was Rs 62.22 cr. Other income of Rs 55.39 cr was large relative to profit before tax of Rs 85.64 cr, so the quarter's earnings were not driven by operating profit alone. The results were filed after market close.
Annual increments weighed on operating performance
Management said EBITDA performance was 14.4% and was affected by annual increments. That cost pressure is relevant to the 16.53% operating margin, although the reported EBITDA measure and operating margin are different measures. The company also said it delivered 2.4% constant-currency revenue growth despite continuing macroeconomic challenges.
Growth was broad-based, led by UK and Europe
Management said all geographies grew sequentially in constant currency, led by UK and Europe at 4.1%. Financial Services grew 16.4% sequentially and Government and Education grew 7.1%. North America delivered a strong order book, while management said geopolitical uncertainty continued to affect the Middle East, AMEA and North America.
AI pipeline and partnerships are central to the outlook
Management said its long-term outlook remains positive, supported by the Data and AI business. It also said Mastek signed a partnership with Innovaccer to pursue AI transformation in healthcare and life sciences, alongside a five-year strategic partnership with a global dental technology leader and a three-year managed-services partnership for a global classification society's Oracle Cloud estate.
Margin sits below the reported IT peer median
Mastek's 16.53% operating margin was 2.93 percentage points below the 19.46% median among 16 Information Technology peers that had reported the same quarter. With no post-results market reaction yet, the stock's response cannot be placed against its historical results-day pattern.
Q2FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 |
|---|---|
| Revenue | ₹238 cr |
| Other income | ₹55 cr |
| Expenses | ₹198 cr |
| Operating profit | ₹39 cr |
| Operating margin (%) | 16.53% |
| Interest | ₹1 cr |
| Depreciation | ₹8 cr |
| Profit before tax | ₹86 cr |
| Tax | ₹23 cr |
| Net profit | ₹62 cr |
| EPS (₹) | ₹20.07 |
Operating margin of 16.53% compares with a Information Technology sector median of 19.46% across 16 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- All geographies grew sequentially in constant-currency revenue, led by UK and Europe with 4.1% growth.
- Financial Services grew 16.4% sequentially and Government and Education grew 7.1%.
- Mastek signed 53 AI deals in Q2, compared with 43 in the previous quarter.
Guidance & outlook
- Mastek’s long-term outlook remains positive, powered by growth in its Data and AI business.
- North America delivered a strong order book with positive momentum to grow in future quarters.
New orders
- Mastek secured a five-year strategic partnership with a global dental technology leader across multiple technology services.
- Mastek secured a three-year outcome-based managed-services partnership for a global classification society’s Oracle Cloud estate.
New initiatives
- Mastek signed a partnership with Innovaccer to drive AI transformation growth in healthcare and life sciences.
Problems & risks
- Mastek’s Middle East business continues to be affected by geopolitical uncertainties.
- Mastek’s EBITDA performance was affected by annual increments.
- The company delivered the quarter despite continuing macroeconomic challenges.
- Geopolitical uncertainty continues in AMEA and North America.
What to watch
- Whether operating margin moves closer to the 19.46% median of reported IT peers.
- Whether other income remains a material contributor relative to the Rs 85.64 cr profit before tax.
- Whether AI deals rise further from 53 and Financial Services sustains its 16.4% sequential growth.