Mastek recovered from its lower levels on Friday following renewed buying support from domestic institutions after a huge 54% slide in just two sessions.

At 14:25 IST, the stock of the software firm was up by 6.92% at Rs 304.40 on the BSE. A volume of over 38 lakh shares was recorded on the counter. After a subdued start, the stock recovered from its intra-day low of Rs 260 per share. In the last two sessions, the stock had shed 54% from Rs 560.20 on 9 April 2003.

As per market buzz, Prudential ICICI was an active buyer on the Mastek counter in morning trades, which helped the scrip to recover from its lower levels.

The huge slide in the stock was due to the company's dismal third quarter results as well as the downward revision of Q4 earnings, that were announced after trading hours on Wednesday. The fall in the stock was accentuated by a broad-based setback for IT stocks following disappointing Q4 results from IT bellwether Infosys Technologies, which also gave a conservative guidance for FY 2003-04.

On a sequential basis, Mastek has announced flat results for the third quarter ended March 2003. However, the company's guidance indicates that profit for the current quarter (ending June 2003) will be poor. While the revenues and net profit for the nine months ended March 2003 stands at Rs 284.66 crore (Rs 2.84 billion) and Rs 47.53 crore respectively, the company projected that for the full year ending June 2003, revenues will be in the range of Rs 370-380 crore (Rs 3.7-3.8 billion). It expects profit after tax for the full year in the range of Rs 50-54 crore. This means that PAT in the June 2003 quarter will be in the range of Rs 2.47-6.47 crore against Rs 16.03 crore in the March 2003 quarter and Rs 20.41 in June 2002 quarter.

The Mastek Group reported a flat sequential net profit of Rs 16.03 crore for Q3 ended 31 March 2003, compared to Rs 16.26 crore in Q2 ended 31 December 2002. On a year-on-year basis, net profit rose by 45% from Rs 11.03 crore in Q3 ended 31 March 2002. While the Group's total income grew by 2% sequentially to Rs 99.06 crore from Rs 97.43 crore in Q2 ended 31 December 2002, on a year-on-year basis, the Group's revenues rose by 37% from Rs 72.54 crore in Q3 ended 31 March 2002.

Currently, US and Europe contribute 27% and 60% respectively to the Group's revenue. Mastek offers a wide range of software services - from the traditional application management to the enablement of eCommerce. It derives majority of revenues from the UK. The company has been assessed at SEI CMM Level 5 and People CMM Level 3.

In its pursuit of diversifying the business offerings, Mastek has launched business process outsourcing services. During Q3, a wholly-owned subsidiary, Mastek BPO Private Limited, was formed for this initiative. The subsidiary has an authorised capital of Rs 10 crore and the initial investment by Mastek in it has been at Rs 2.51 crore. A pilot but scalable facility admeasuring 7,590 square feet has been taken on lease at Thane near Mumbai.

As on 31 December 2003, promoters held 44.77% equity stake in Mastek, while public and institutions held 12.35% and 37.73% respectively.