Buy Majesco, target Rs 730: ICICI Direct

ICICI Direct has a buy call on Majesco Ltd. with a target price of Rs 730. The current market price of Majesco is Rs 522.45 Time period given by the brokerage is 12-18 Months when Majesco Ltd. price can reach the defined target.

Majesco Ltd., incorporated in 2013, is a small-cap IT company with a market cap of Rs 1460.96 crore.

Investment rational by ICICI DirectA continuous transition towards a cloud driven model and momentum in IBM partnership led the company to maintain its growth momentum since Q2FY18. Moreover, deal ramp up and healthy order backlog also improves revenues visibility. We value Majesco US (Majesco India holds 70% stake) at 4x EV/sales, which is at ~50% discount to global peers such as Guidewire to account for modest growth/margin profile. After considering a holding company discount of 30%, Majesco’s 70% stake in Majesco US, target price works out to | 730 per share providing significant upside from current levels. Hence, we reiterate our BUY rating.