Mastek ‘Value Unlocking’ Report By IndiaNivesh

Yet again our stand has been vindicated on value unlocking possibility in Mastek. In our initiation report dated Jan. 6th 2014, we mentioned various possible outcomes, which could enhance shareholder value in long run. One of the scenarios we envisaged was ‘Divestment/Listing of U.S. Insurance Business separately’.

In our view, this development is positive for investors; however this entire process would consummate in at least 3-4 quarters. On a while this exercise would unlock the value of insurance vertical, as it demands higher valuation relative to other segments (Government, Financial Services, & other Services). The services business could also see P/E re-rating on account of higher net profit relative to the overall company level. Also this development could pave way for the individual entities to raise funds through various alternatives. In our view, de-merging the business and valuing these two entities separately, we arrived at target price of Rs.550/share (Combined Entity).

Download Mastek Research Report By IndiaNivesh