Revenue in the quarter was driven by UK government and US retail. While the UK private sector was flat in the current quarter, Mastek believes the UK private sector has bottomed out. Hence, with traction in UK government revenues, US retail and UK private sector, we expect the company to register improving revenues in coming quarters. In addition, Evosys expertise in Oracle cloud migration coupled with Mastek's capability to cross-sell data analytics, application support and digital commerce will help the company win integrated and larger deals. This will result in multi-million...

We recommend a Buy rating on Mastek Limited with a price target (PT) of Rs. 1,040 as risk-reward balance remains favourable. Company delivered a strong set of numbers in Q2FY21, led by strong growth in both the UK and US businesses and accelerated growth in the Oracle services business; EBITDA margin expanded by 348 bps q-o-q to 21.1%; order-booking grew 22% q-o-q. Management expects H2FY2021 to be better than H1FY2021, led by a strong order book, continued growth in UK government projects and higher demand for cloudrelated services; Evosys order-book was up by over 65% y-o-y The stock is trading at a reasonable valuation of 10x its FY2023E EPS; net cash...

We recommend a Buy rating on Mastek Limited with a price target (PT) of Rs. 1,040 as risk-reward balance remains favourable. Company delivered a strong set of numbers in Q2FY21, led by strong growth in both the UK and US businesses and accelerated growth in the Oracle services business; EBITDA margin expanded by 348 bps q-o-q to 21.1%; order-booking grew 22% q-o-q. Management expects H2FY2021 to be better than H1FY2021, led by a strong order book, continued growth in UK government projects and higher demand for cloudrelated services; Evosys order-book was up by over 65% y-o-y The stock is trading at a reasonable valuation of 10x its FY2023E EPS; net cash...

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...

Organic revenues are expected to be impacted by a ramp down by customers in UK private retail & financial services and pricing pressure in US retail partly offset by higher growth from UK government business. However, vendor consolidation opportunity in US retail and integrated offering of Evosys & Mastek is expected to boost the topline. There is a significant shift of enterprise towards cloud migration and Evosys expertise in Oracle cloud migration is gaining traction. This coupled with Mastek's capability to cross-sell data analytics, application support and digital...

Our TP of Rs 400 is based on 7x FY22E EPS plus Rs 36/sh for ~5% stake in Majesco US. Maintain BUY. Mastek delivered strong revenue and margin performance led by the integration of Evosys. Mastek organic growth (+1.1% QoQ) was inline led by traction in UK Govt. (+6.9% QoQ CC) offset by weakness in UK private (Covid+Brexit) and US (-18.5% QoQ CC). Weakness in US (Retail) and UK Private (Retail+BFS) will impact Mastek organic growth in FY21E. Margin expansion (+349bps QoQ) in the quarter was led by the integration of high margin Evosys business. We assume Evosys revenue of USD 63mn and ~19% EBITDA margin for FY21E. We cut our USD revenue estimate by 4.1/3.6% for FY21/22E due to high exposure to Retail (~22% of rev) and Covid-19 uncertainty. We increase our EPS estimate by 13.1/19.4% for FY21/22E to factor in higher-margin Evosys integration and currency tailwind

The company's organic revenues in the near term are expected to be under pressure led by a ramp down by customers in UK private retail & financial services and deferral of sales to later part of the year. In addition, the US geography, which is primarily focused on the retail sector, faced a delay in projects and pricing pressure, which is further expected to impact organic revenues. However, the acquisition of Evosys, vendor consolidation opportunity in US retail and higher sales pipeline in UK government are expected to drive overall revenues in FY21E. We expect FY21E revenues to...

Evosys is focused on Oracle cloud implementation and consultancy. It provides a gamut of solution offerings like Oracle HCM Cloud, Oracle ERP Cloud, Oracle SCM Cloud, Oracle CX, Oracle EPM Cloud, PaaS solutions (including custom-built solutions), AI, IoT and machine learning. The company generates 60% of revenues from Oracle cloud implementation, 32% from support services and rest from licence revenues. Geography wise, the company generates 44% of revenues from Middle East, 17% from North America, 30% from the US, UK and the rest from APAC region. Further, the...

Mastek has invested in strengthening its executive team both in US and UK geography. UK Govt. growth has slowed down due to Brexit uncertainties and UK elections but is expected to revive post the Brexit outcome and completion of spending review. US revenue is impacted by Retail slowdown but will recover led by ramp-up of new deals. Mastek will benefit from off-shoring opportunity at UK public sector given its long relationship with UK government and limited competition from Indian IT, off-shoring can aid margin expansion. We expect GBP growth for FY20/21/22E at -2.7/8.2/11.6% and 11% EPS CAGR for FY19-22E. The stock trades at 9.0/7.7x FY21/22E and Brexit clarity will result in re-rating. Mastek's stake in Majesco US (Rs 39/sh) and net cash (~Rs 145/sh) protects downside. We maintain BUY on Mastek following a weak 3Q on revenues but stable margin performance. UK elections, Retail slowdown, Brexit uncertainty and furloughs impacted revenue growth but cost management was impressive. Mastek successfully monetised 56% of its Majesco US holding and net cash stands at Rs 3.71bn (35% of Mcap). Our SoTP based TP of Rs 510 is based on 9x (~18% discount to 5Y average) Dec-21E EPS plus Rs 39/sh for 5% stake in Majesco US.

During FY16-19, the company's rupee revenue has grown at a healthy 25.2% CAGR. Acquisition of TaisTech got consolidated in FY18 for full year. However, in the near term (H1FY20), deferral of projects and delay in deal closures due to Brexit in UK had led to weak H1. Owing to major proportion of revenues coming from UK geography and government, we expect FY20E to report a revenue decline. The weakness would flow down to EBIT margin and profitability front. Though improving sentiments in UK government business, rising proportion in US business along with cost optimisation...

Mastek has been strengthening its executive team, three new additions in past eight months. We believe these are strategic initiatives for driving growth. We like Mastek's initial success in recovering US business and managing the Brexit uncertainty. Mastek will benefit (margin lever) from the off-shoring opportunity (~USD 20mn) arising with UK public sector given its long term relationship with UK government and limited competition from Indian IT. Brexit deal is positive but we would wait for further clarity to bake in our estimates. We expect GBP growth for FY20/21/22E at 0.1/9.6/11.0% and 5.4% EPS CAGR for FY19-22E. Mastek's stake in Majesco US (Rs 94/sh) and net cash (~Rs 79/sh) protects downside. We maintain BUY on Mastek despite slight miss on revenue and margins. Brexit deal announcement is positive but we do not build any optimism in our estimates and will wait for clarity. We cut our EPS est. by ~5% for FY21E. SoTP based TP of Rs 505 implies 9x Sep-21E EPS plus Rs 94/sh for 12% stake in Majesco US.

Mastek has successfully ramped up UK Govt. digital business (+6.9% 4-QTR CQGR). Mastek is the only Indian IT company in UK Govt's top-10 vendors list. We also like its initial success in recovering the US business (+8.7% QoQ) led by increased focus and management changes. Mastek is blessed with low exposure to legacy (~16% of rev) and can deliver 11.4/8.6% GBP rev/EPS CAGR over FY19-21E. Its stake in Majesco US (Rs 94/sh) and net cash (~Rs 67/sh) provide additional comfort. Risks to our thesis include prolonged deferment of spend in UK private due to Brexit and GBP depreciation. We maintain BUY on Mastek following a weak 1Q on revenues but stable margin performance. US turnaround is faster than expected and order book growth is encouraging. We cut est. by ~4% factoring soft UK Pvt. Our SoTP of Rs 618 implies 11x FY21E EPS plus Rs 94/sh for 12% stake in Majesco US.

With low exposure to legacy (~16% of rev), Mastek generates low teen margins, given higher on-site revenues and effort mix. We like its success in ramping up UK Govt digital business. Mastek is the only only Indian co in their top-10 vendor list. Co can generate 14.0/13.4% GBP rev/EPS CAGR over FY19-21E (despite US softness and Brexit worries). Its stake in Majesco US (Rs 83/sh) and net cash (Rs 63/sh provide additional comfort. Risks to our thesis include deferment of spend due to Brexit and GBP depreciation. We maintain BUY on Mastek following an inline 4QFY19. Our SoTP is Rs 657 implying 11x FY21E EPS which includes Rs 83/share for 12% stake in Majesco US.

We Initiate coverage with a BUY rating and a TP of Rs 660, based on 11x FY21E EPS. 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, its 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.