Masket
Mastek is in two main businesses
Ø Software Solutions services
Ø Insurance Platform & Insurance Software Solutions
Mastek is in the process to demerge their two different companies as follows .On completion of this corporate action there will be 2 separate companies listed on bourses
Ø Mastek Ltd – (Inc. Solutions & Services Business)
Ø Majesco Ltd – (Inc. Insurance Platform & Insurance Software Solutions).
Every one share of the Masket will get one each shares of the above 2 companies after the completion of demerger process which may take 1 to 12 months.
My take on both the companies:
1st I want to analysis the present intrinsic value and then I will analyse the future estimated value for the both companies
Present value of both the businesses:
Mastek Ltd – (Inc. Solutions & Services Business)
Mastek Limited (Software & Services) FY14
Revenue 4160
EBITDA 599
EBITDA Margin % 14%
Dep 118
Int 3
PBT 478
Tax 115
PAT 363
PAT Margin % 8.7%
EPS 16.4
After the demerger Mastek will be left with software and services businesses , comparing with other midsize IT services and software business , I will give it 9 PE . And hence I will value it at 147 rupees per share .
Majesco Ltd – (Inc. Insurance Platform & Insurance Software Solutions).
Majesco is also restructuring its business in US . After restructuring the business, Management is going to list Majesco in NYSE exchange . Majesco (formerly, MajescoMastek), the global provider of core insurance systems and services to approximately 100 insurance carriers worldwide, announced that it has entered into a definitive merger agreement with Cover-All Technologies Inc. (NYSE MKT:COVR), an insurance software company based in Morristown, NJ, in a 100% stock-for-stock transaction, pursuant to which Cover-All’s stockholders and the
Holders of its options and restricted stock units, in the aggregate, will, upon the closing of the merger, receive 16.5% of the outstanding shares of common stock of the combined company, on a fully diluted basis. The combined entity will retain the “Majesco” brand globally. Cover-all technology today trade at the valuation of 28.5 million dollars which will be 16.5 % of Majesco . Hence Majesco should be value at 172 million US dollars when it will be listed in NYSE (which will take 3 to 6 months ) . It is 1036 crore rs market cap. Majesco India will hold 83.5 % of Majesco US, hence it should be valued at 865 crore Rs . It gives it 386 rs per share valuation.
Both companies together have the presence value of 147 (Mastek ) and 386 (Majesco ) which is 533 rs per share . Which have 23 % potential appreciation then today’s market price of 432 . (24/02/2015)
Future Estimated value of both the companies:
Mastek :
In the future Mastek should grow at 8 to 10 % (Management indicated that in the last interview on CNBC http://www.moneycontrol.com/news/resultsboardroom/hope-to-improve-marginssvcs-bizfew-quarters-mastek_1281269.html )
My 2016 estimated EPS of Mastek is 19.8 and if we again will give it 9 PE then the price should be 178 Rs.
Majesco:
Majesco also merged Agile technology and Majesco UK businesses and all other insurance businesses under one umbrella which is Majesco USA. I will give all the business at least 300 million dollars of Market cap in 2016 comparing it with its nearest competitor in US and giving it just half ( Market cap / sales ) valuation then the nearest competitor . Which will be 670 Rs per share . If I will give Majesco India 15 % holding company discount , it still will be valued at 570 rs per share .
Both companies conservative future valuation will be 570 (Majesco ) and 178 ( Mastek ) which have 75 % potential appreciation then the current price of 432 .
Conclusion:
Its evident from this research that Mastek is undervalued in term of its presence and future value of its businesses. One should buy it at current market price of 432 for 22 to 28 % compounded return for next 4 to 5 years .
Disclosure : Holding 3100 shares at 311 .
Mastek is in two main businesses
Ø Software Solutions services
Ø Insurance Platform & Insurance Software Solutions
Mastek is in the process to demerge their two different companies as follows .On completion of this corporate action there will be 2 separate companies listed on bourses
Ø Mastek Ltd – (Inc. Solutions & Services Business)
Ø Majesco Ltd – (Inc. Insurance Platform & Insurance Software Solutions).
Every one share of the Masket will get one each shares of the above 2 companies after the completion of demerger process which may take 1 to 12 months.
My take on both the companies:
1st I want to analysis the present intrinsic value and then I will analyse the future estimated value for the both companies
Present value of both the businesses:
Mastek Ltd – (Inc. Solutions & Services Business)
Mastek Limited (Software & Services) FY14
Revenue 4160
EBITDA 599
EBITDA Margin % 14%
Dep 118
Int 3
PBT 478
Tax 115
PAT 363
PAT Margin % 8.7%
EPS 16.4
After the demerger Mastek will be left with software and services businesses , comparing with other midsize IT services and software business , I will give it 9 PE . And hence I will value it at 147 rupees per share .
Majesco Ltd – (Inc. Insurance Platform & Insurance Software Solutions).
Majesco is also restructuring its business in US . After restructuring the business, Management is going to list Majesco in NYSE exchange . Majesco (formerly, MajescoMastek), the global provider of core insurance systems and services to approximately 100 insurance carriers worldwide, announced that it has entered into a definitive merger agreement with Cover-All Technologies Inc. (NYSE MKT:COVR), an insurance software company based in Morristown, NJ, in a 100% stock-for-stock transaction, pursuant to which Cover-All’s stockholders and the
Holders of its options and restricted stock units, in the aggregate, will, upon the closing of the merger, receive 16.5% of the outstanding shares of common stock of the combined company, on a fully diluted basis. The combined entity will retain the “Majesco” brand globally. Cover-all technology today trade at the valuation of 28.5 million dollars which will be 16.5 % of Majesco . Hence Majesco should be value at 172 million US dollars when it will be listed in NYSE (which will take 3 to 6 months ) . It is 1036 crore rs market cap. Majesco India will hold 83.5 % of Majesco US, hence it should be valued at 865 crore Rs . It gives it 386 rs per share valuation.
Both companies together have the presence value of 147 (Mastek ) and 386 (Majesco ) which is 533 rs per share . Which have 23 % potential appreciation then today’s market price of 432 . (24/02/2015)
Future Estimated value of both the companies:
Mastek :
In the future Mastek should grow at 8 to 10 % (Management indicated that in the last interview on CNBC http://www.moneycontrol.com/news/resultsboardroom/hope-to-improve-marginssvcs-bizfew-quarters-mastek_1281269.html )
My 2016 estimated EPS of Mastek is 19.8 and if we again will give it 9 PE then the price should be 178 Rs.
Majesco:
Majesco also merged Agile technology and Majesco UK businesses and all other insurance businesses under one umbrella which is Majesco USA. I will give all the business at least 300 million dollars of Market cap in 2016 comparing it with its nearest competitor in US and giving it just half ( Market cap / sales ) valuation then the nearest competitor . Which will be 670 Rs per share . If I will give Majesco India 15 % holding company discount , it still will be valued at 570 rs per share .
Both companies conservative future valuation will be 570 (Majesco ) and 178 ( Mastek ) which have 75 % potential appreciation then the current price of 432 .
Conclusion:
Its evident from this research that Mastek is undervalued in term of its presence and future value of its businesses. One should buy it at current market price of 432 for 22 to 28 % compounded return for next 4 to 5 years .
Disclosure : Holding 3100 shares at 311 .
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