Mastek Ltd. | Reiterate BUY with TP of Rs.554

Mastek Ltd. | Reiterate BUY with TP of Rs.554 | At CMP of Rs.390, the stock is trading at P/E multiple of 29.5x FY15E, 16.1x FY16E and 8.9x FY17E earnings estimate. In our view, the completion of corporate action is likely to enhance the overall valuation of the company. The Software business net profit margin (8.7% standalone) was tempered due to lower net margin (1.4% standalone) in product business. However, excluding product development expenditure, the insurance vertical net margin stood at ~10.0% (standalone) in FY14. We value Software business at P/E multiple of 8.5x (TP Rs.142) and Insurance vertical at M-cap/Sales multiple of 1.7x (TP Rs.412). On consolidated basis we arrive at the target price of Rs.554/share, we maintain BUY rating on stock. (IndiaNivesh)