Buy Majesco; target of Rs 420: Anand Rathi

Anand Rathi 's research report on Majesco

Majesco’s Q4 revenue beat our estimate: up 2% q/q, 2.8% y/y, to $37.9m, aided by Services (up 6% q/q) and cloud subscription (up 5% q/q, Metlife implementation went live, expect full roll out in 2020) offset by a drop in cloud implementation (down 9% q/q from lack of new deals). The 8.4%EBIT margin was flat q/q, up 196 y/y, lower than expected on higher SG&A. The sturdy $109.8m order book was up 8% q/q, 13% y/y. Inspro will be integrated from Q1; with this acquisition, revenues are unlikely to dip in FY21.

Outlook

With no major changes to FY21e/22e, we retain a Buy with an unchanged target of `420 (13x FY22e PE, a 20% holdco discount).

Majesco 02062020-rathi