Moneycontrol Bureau
Investors are excitedly buying shares of Mastek for the sixth consecutive session Friday especially after Cover-All Technologies (on June 23) said its shareholders approved Cover-AII’s adoption of the agreement and plan of merger into Majesco, USA. The stock rallied 50 percent in six sessions, including today's intraday 20 percent upside.
As per the merger agreement, each outstaning share of common stock of Cover-All will be exchanged for 0.21641 of a share of common stock of Majesco.
Majesco, USA is a subsidiary of Majesco, India that is a part of Mastek.
The revision of circuit filer by exchanges also lifted the sentiment. Exchanges, on June 25, said Mastek shall be transferred from trade to trade segment (BE) to rolling segment (EQ) with effect from June 26, 2015. Accordingly, the circuit has been changed to 20 percent from 5 percent earlier.
Pursuant to the scheme of arrangement and demerger, Mastek was shifted to trade for trade segment with effect from June 12 and it was also a part of call auction in pre-open session.
Another reason that boosted the stock is its demerged insurance business, which will be handled by Majesco. Analysts believe that unlocking value of insurance business and listing of Majesco on NYSE (likely in July-August) will play an important role henceforth.
As per the merger agreement, each outstaning share of common stock of Cover-All will be exchanged for 0.21641 of a share of common stock of Majesco.
"Mastek (software services business) is holding 13.8 percent stake in Majesco US and that value of 13.8 percent stake according to the Majesco US valuations comes to around Rs 142 crore so that in terms of price per share comes to Rs 63 per share. So the fair value of Mastek limited according to me comes to around Rs 230," said Amit Chandra, senior research analyst at BP Wealth on June 12.
Majesco will also list on Bombay Stock Exchange and National Stock Exchange soon.
For the year ended March 2015, Majesco, which offers an integrated portfolio of software and services to the insurance industry, posted a loss of USD 0.65 million against profit of USD 2.92 million in previous year. During the same period, revenue declined by 4.3 percent to USD 79.28 million from USD 82.84 million. "12-month order backlog was USD 48.9 million as of March 31, 2015 as compared to USD 44.9 million as of December 31, 2014, reflecting an increase of 8.9 percent," said Majesco.
The scrip of Mastek closed at Rs 207.70, up Rs 31.60, or 17.94 percent on the Bombay Stock Exchange.
Posted by Sunil Shankar Matkar
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