Buy Mastek; target of Rs 660: HDFC Securities

HDFC Securities’ research report on Mastek

Mastek, founded in 1982, is one of the oldest IT companies in India. Mastek has experience spanning over three decades but in its current version, it’s just a four-year-old organisation (Demerger with Majesco happened in 4QFY15). Mastek has transformed itself post the demerger, led by (1) Appointment of experienced and capable CEO, John Owen, in Nov-2016 (2) Direct relationship with UK Govt. vs being a sub-contractor earlier and (3) Acquisition of TAIS Tech (SI for Oracle ATG), which marks its entry in the US. Under the new leadership, Mastek has delivered healthy revenue CAGR of 32% (~23% organic) and margin expansion of ~370bps over FY17-19E.

Outlook

Majesco US (~Rs 79/share), net cash position (Rs 82/share) provides additional comfort. We Initiate coverage with a BUY rating and a TP of Rs 660, based on 11x FY21E EPS.

For all recommendations report, click here

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First Published on Mar 29, 2019 04:28 pm

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