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00:00Good morning and welcome to NDTV Profit. My name is Rucha Sumaiya and today we are going
00:10to discuss Mastec, which has come out with its first quarter FY25 earnings. Talking about
00:14the earnings, revenue was up around 4.5% while margins were largely flat at around 12.8%
00:21while net profit was down about 24% during the quarter. And we are being joined by the
00:27CFO Mr. Arun Agarwal to talk to us about the results. Hello and welcome to the show, sir.
00:32Thank you for joining us. What's your take on the results this time? Margin largely flat
00:37but revenue up about 4.5%.
00:39Thanks, Rucha for having me here. We are really happy with our quarterly performance. As we
00:45have stated in the past, our order book continues to grow while the macroeconomic environment
00:51challenges and the delay in decision making continues. But the strategic investments which
00:55we have made consistently over the last three years has started giving the results. The
01:00same is reflected into our consistent order backlog growth, which is $260 million as we
01:05speak, 23% growth year on year in INR terms. The same has started reflecting into our revenue
01:10growth. We have grown 4.3% in INR terms to be precise and 4.1% in constant currency quarter
01:16on quarter, which is really good growth in line with our expectation. On the margin side,
01:21EBIT is mostly flat. However, on the operating EBITDA side, we saw some dip, which is again,
01:26as you ramp the growth, there are certain costs which are associated from the timing when you
01:30start the project versus we have got the resources onboarded. There were some challenges from the
01:35timing perspective and also we had some period in the AMIA. More from the timing perspective,
01:40again, as you approved for them. From the business perspective, as we see, the revenue
01:44growth will continue to be there and also margin improvement will be there in line with our
01:48expectations. So, we are really confident and looking forward to quarter on quarter growth
01:53going ahead as well. So, sir, what kind of margins do you expect the company to achieve
01:57going ahead and what will be the key levers? As I mentioned, on an operating EBITDA basis,
02:04we have reported 15.2% this quarter and we track more operating EBITDA. This will continue to
02:11improve. We have stated that our objective is to trade in the range of 17% in the short term to
02:15medium term. However, it will take a quarter or two to come back to that level, but a part of 16%
02:21is the starting point and gradually in the coming quarters, we will move to 17% kind of a range.
02:27Okay. Right. I got that margin point, but let me move to order backlog. It has been around 2,100
02:36for the current quarter, but when I look at the past quarter also, the quarter four,
02:40it has been around the similar line. So, in terms of order book, was this quarter a little muted?
02:47Quarter one is always seasonally lower quarter. From the timing perspective, you book very strong
02:52order in quarter three, quarter four, because that sets you up for the next year growth, right? That
02:56was the focus. Quarter one, where the most of the renewal happens and some of the net new deals also
03:01gets closed. That's a pattern which we have seen in Mustang. So, we are really happy because whatever
03:05numbers we were planning, we have closed better than that, which has reflected into the numbers
03:10out there. So, from the market perspective, we don't see any challenge in the areas we are
03:14operating at, but yes, delay in decision making continues. The longer the cycles are there,
03:18discretionary spends are still under a lot of scrutiny. So, those patterns will continue,
03:22but there's a pattern which has immersed in terms of all the geographies where we are operating,
03:28the cloud deals where we are operating as well. We are getting good momentum building up there,
03:32which is reflected into our numbers. So, discretionary spends are still
03:37under pressure as what you mentioned. It's under a lot of scrutiny. Absolutely.
03:42The things are improving, the customers are becoming much more lighter, but scrutiny has
03:46not gone away. So, do you think the second half of the year will be better as US elections turn
03:51out and things be a little clearer? Will that be good for the company?
03:56We are looking ahead to it. The UK elections are over. We expect a lot of these will also
04:01start coming in the UK market because we have been very strong in that market as well.
04:05And US elections and as Fed starts cutting down the rates down the road, we believe a lot of
04:10momentum will build. We are also looking forward to that momentum building because
04:15all of those are going to help in terms of our revenue growth further on top of it.
04:20Okay. So, with that, let me just move on to the geography kind of bifurcation in terms of revenue.
04:26UK, Europe has been growing at a higher pace than the US. So, what kind of growth over here do you
04:32expect? Around 17% to 19% is what the aspirations were?
04:37That's a more medium to long-term aspiration. Obviously, it depends upon the market scenario.
04:42As we are operating more with a muted market, despite that, giving 4% growth is of a high
04:48confidence to us. But yes, if the market improves, then obviously the same will reflect into our
04:54ambition of delivering better than market growth in the coming period.
04:58Sure, sure. Thank you so much for joining us. I think we are out of time right now. A lot of
05:02questions, but we will definitely catch up with you over the next quarter. All the best for your
05:07earnings ahead and thank you for joining us.