Mastek surges over 14% as subsidiary plans NYSE listing

MUMBAI: Shares of Mastek witnessed a price-volume breakout after the company said its subsidiary Majesco is planning to list on the New York Stock Exchange (NYSE).

The stock surged over 14 per cent in intraday trade. It eventually closed 8.12 per cent higher at Rs 427.20.

"We wish to inform you that Majesco, USA (formerly known as MajescoMastek), a subsidiary of Mastek Limited has filed Form S-4 a Registration Statement under the Securities Act of 1933, with Securities and Exchange Commission (SEC) of United States of America, for the proposed merger of Cover-All Technologies Inc, with Majesco and listing of Majesco on NYSE-MKT,” the company said in a filing to stock exchanges.

Majesco has entered into a merger agreement with Cover-All Technologies.

IndiaNivesh has recommended buy on the stock with a target price of Rs 554.

According to the brokerage, demerger and listing of Majesco on NYSE could lead to significant re-rating and improvement in its performance.

“The standalone Services business profitability and return on equity (ROE) is likely to improve, which would lead to PE multiple expansion. On the other side, listing on NYSE will bring re-rating to platform business. At present, the platform business is valued at 0.8 times (against 4-9 times for peers in P&C platform space) of mcap to sales,” the report said.

“We value Software & Services business at P/E multiple of 8.5 times and Insurance vertical at mcap/sales multiple of 1.7 times. On consolidated basis, we have arrived at target price of Rs 554 per share,” the report added.