Anand Rathi Research
Target: ₹2,240
CMP: ₹1,766.25
Mastek reported a performance in line with expectations for Q4 FY26, achieving a 0.3 percent quarter-on-quarter growth in constant currency revenue to $103.5 million. The company also witnessed a robust year-on-year increase of 13.6 percent in its 12-million order backlog, despite facing macroeconomic and geopolitical challenges.
Management indicated that they anticipate stronger growth in FY27 compared to FY26, despite AI-driven pricing pressures and ongoing macro uncertainties. Notably, the U.S. market exhibited sequential growth in the order book for the second consecutive quarter.
However, the company experienced a margin decline of approximately 70 basis points quarter-on-quarter, attributed to the full-quarter influence of wage increases, partially offset by forex tailwinds and enhanced operational efficiency.
In Q4, Mastek introduced over 27 new AI-focused programs, increasing the AI share of its order book from 3 percent to 9 percent over the past two quarters, although the average deal size remained modest, around $1 million. It is important to note that AI is exerting considerable pricing pressure on contract renewals, resulting in discounts ranging from 10 to 15 percent.
Mastek is transitioning its commercial model from time and materials (T&M) to fixed-bid, outcome-based contracts, with approximately 40 percent of contracts reflecting this model, rising to about 55 percent in North America. The company guided for an EBITDA margin of 16-16.5 percent for FY27, a revision from its previous guidance of 16.5-17 percent, indicating no expected margin expansion as AI-related savings are offset by pricing pressures and investments in AI capabilities.
Strategically, Mastek is moving toward AI-driven, outcome-based engagements, accepting volatility in the short term to foster long-term growth and increase market share. Consequently, Anand Rathi Research maintains a BUY recommendation for the stock, with a target price of ₹2,240, suggesting an approximate 28 percent upside from the current market price.
Published on April 21, 2026
