Mastek gave the market reason to cheer in morning trades as its results turned out in line with expectations and net profit surged a magnificent 165.25 per cent.

By 9:57 IST, the scrip of the second-line software company leaped up 4.61 per cent to Rs 564.90. It registered volumes of over 1.02 lakh shares on BSE by then.

In contrast, Mastek was moving downstream of late, it lost 11 per cent to Rs 540 on 13 January 2002 from its 52-week high of Rs 606.40 on 10 January 2003. The lowering of the stock came about after Infosys' Q3 results came in short of market's expectations. Infosys is generally considered a benchmark for the overall tech sector.

But in the prior 41 sessions (between 12 November 2002 and 10 January 2003), the scrip climbed 68.4 per cent from Rs 360.

On Monday, after market hours, Mastek said second quarter ended 31 December 2002 consolidated net profit surged 165.25 per cent to Rs 16.26 crore compared to Rs 6.13 crore in the corresponding period in the previous year.

Total revenues increased 47.5 per cent to Rs 97.43 crore from Rs 66.07 crore in DQ 2001.

The net profit came in line with market expectations (of Rs 15-17 crore). Revenue, in fact, outperformed market expectations of Rs 90-95 crore.

Looking ahead, the company has raised net profit guidance for the group (including share of joint ventures) from Rs 54-58 crore to Rs 64-68 crore for the year ended 30 June 2002-03.

Commenting on the performance, Ashank Desai, CMD, Mastek, said, "We are addressing with full force the challenge of progressing our existing strategic accounts, particularly in the US. Having successfully delivered the pilots, quite a few of these accounts have already increased their business with us. In some accounts, we see a ramp-up over the next few quarters. Although much would depend also on the economy and annual IT-budget increases, our early successes do make us feel somewhat optimistic."

Mastek is also upbeat because of its inclusion in the new list for derivatives trading. Last week (on Thursday), the Securities and Exchange Board of India granted permission to introduce futures and options contracts in 31 additional stocks in the derivatives segment of the National Stock Exchange and an additional 21 stocks in the same segment of the Bombay Stock Exchange.

Inclusion in the derivatives list may lead to higher activity on the Mastek counter, feel players.

Institutional investors are believed to be mopping up the Mastek stock. Recently, US based fund J&W Seligman picked around 4.11 per cent stake in the company.

On the other hand, domestic mutual fund Alliance Capital Mutual Fund recently offloaded 3.10 lakh shares of Mastek, bringing down its holding in the company by 2.2 per cent to 5.65 per cent.

Earlier, there were reports that the company was chalking out plans to enter the business process outsourcing (BPO) segment.

The company, however, announced that it has not taken any decision on foraying into the BPO business so far.

Recently, the company commenced operations at Mastek Millennium Centre, its new hi-tech software development centre at the Millennium Park, Mahape, Navi Mumbai. Mastek, which services Fortune 1000 clients across the world, already has three SDCs in Mumbai and one in Pune.

The Mastek Millennium Centre is the fifth SDC. The new SDC has the capacity to house 1,100 people, when fully operational.

The company is understood to be on a major recruitment drive of late, and its manpower is expected to increase to about 2,000 software professionals by June 2003, from to about 1,300 professionals in June 2002.

It has already added 157 professionals in the first quarter ended 30 September 2002.

Mastek offers a wide range of software services - from the traditional application management to enable e-commerce.

It derives majority of revenues from the UK. The company has been assessed at SEI CMM Level 5 and People CMM Level 3.

For the export business, Mastek has developed a subsidiary model and has seven arms each in UK (Mastek UK), USA (Majesco Software Inc), Singapore (Singapore Asia Pacific), Germany (Mastek GmbH), Belgium (Mastek NV) and two in Malaysia.