Mastek shares: Sunil Singhania-backed IT stock jumps over 15% today; here's why

Shares of Sunil Singhania backed Mastek Ltd surged more than 15 per cent during the trading session Friday after the company announced a deal with Nvidia AI Enterprise to boost the customer experience. The company informed about the same through an exchange filing on Thursday.

Mastek announced advancing its icxPro platform with NVIDIA accelerated computing. Offering the customer experience (CX) solutions powered by artificial intelligence (AI), icxPro has demonstrated a 20 per cent return on capital employed (ROCE) in the manufacturing sector, with massive potential in the BFSI and healthcare sectors, said the company in an exchange filing.

Mastek's icxPro will help streamline the development of domain-specific AI applications using the full-stack NVIDIA's accelerated computing platform. This also includes NVIDIA NIM microservices. Running on NVIDIA A100 Tensor Core GPUs, Mastek’s icxPro will enable businesses to achieve faster time to market and unlock significant business value.

Following the announcement, shares of Mastek surged more than 15.30 per cent to Rs 2,972.65 on Friday, commanding a total market capitalization of more than Rs 9,000 crore. The scrip had settled at Rs 2,579.10 in the previous trading session on Thursday.

Mastek is India-based digital engineering and cloud transformation player and launch of its icxPro, which is a cloud-native platform designed for building scalable AI applications, has significantly supported the company's growth strategy. The key solutions this platform will bring to the manufacturing, healthcare, and BFSI sectors.

"We are excited to collaborate with NVIDIA to roll out business solutions in machine parts, intelligent fraud management and intelligent supply chain for Manufacturing, BFSI and Healthcare," said Ritwik Batabyal, CTO & Innovation Officer at Mastek.

Superstar fund manager Sunil Singhania, through two schemes of his Abakkus Asset Managers, owned a cumulative 9,68,325 equity shares, or 3.14 per cent stake, in the company as of March 31, 2024. This stake was worth Rs 287.85 crore as of Friday's high.

Brokerage firms were mostly positive on the stock after its quarterly results announced in April 2024. "We believe the company is well placed to achieve industry-leading growth given the robust 12-month order backlog, healthcare growth in the U.S., and progress in the U.K. public sector. Hence, we maintain 'buy' with a revised target price of Rs 3,150," said Sharekhan.

Anand Rathi Shares & Stock Brokers expect Mastek to clock a 13 per cent revenue CAGR over FY24-26 and slightly higher Ebit margins of around 14.4 per cent by FY26, from 13.7 per cent in FY24, leading to a 16 per cent EBIT CAGR. "The stock trades at FY26e PE of 20 times, which we find attractive," it added with a buy rating and a target price of Rs '3,320' on the stock.

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