Mastek Ltd.

NSE: MASTEK | BSE: 523704 | ISIN: INE759A01021 |Industry: IT Software Products
|Turnaround Potential
700.60 4.45 (0.64%)
NSE Aug 13, 2020 15:31
Volume: 256.1K

Mastek Ltd.    
31 Jul 2020
HDFC Securities
Max Financial: Despite a difficult environment, MAXL delivered an APE decline of just 3.5% YoY. The margin was 250bps YoY lower mainly due to an increase in reinsurance costs, which the company has passed on 2QFY20 onwards. We expect the margin to improve hereon. We believe the deal with AXSB will provide long-term distribution capability. We expect an FY21-23E APE/VNB CAGR of 12.6/16.2%. We retain our ADD rating with an unchanged target price of Rs 645 (FY21E EV + 21.3x FY22E VNB). Navin Fluorine International: We retain our ADD rating on NFIL with a target price of INR 1,840 on the back of (1) earnings visibility given long term contracts, and (2) tilt in sales mix towards customised products. The stock is currently trading at 22.5x FY23E EPS, which is contextually low, given the RoIC of 21.6/24.2% in FY22/23E. Mastek: Mastek delivered strong revenue and margin performance led by full quarter integration of Evosys. Mastek organic business was down 4.4% QoQ due to weakness in UK private (-6.5% QoQ, Retail+BFS) and US Retail portfolio offset by strong UK Govt. (+13.9% QoQ). The UK Govt. will continue to perform well given Mastek's strong relationship, integration of Evosys capabilities, and revival of UK Govt spending. The UK private sector is facing the dual impact of Brexit and Covid-19 and will remain under stress. US revenue is impacted by Retail slowdown and recovery will be protracted. EBIT Margin expanded 321bps YoY to 14.7% led by the integration of high margin Evosys business. Evosys has performed well (+10% QoQ), driven...
Number of FIIs/FPIs holding stock rose by 7 to 51 in Jun 2020 qtr.
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