Mastek in demand post demerger of insurance biz

Mastek rose 16.41% to Rs 204.60 at 15:08 IST on BSE, extending recent gains triggered by the company recently hiving off its insurance business into a separate entity called Majesco.

Meanwhile, the BSE Sensex was down 111.77 points, or 0.40%, to 27,784.20.

On BSE, so far 7.17 lakh shares were traded in the counter, compared with an average volume of 1.15 lakh shares in the past one quarter.

The stock hit a high of Rs 211.30 so far during the day, which is also a 52-week high for the counter. The stock hit a low of Rs 184 so far during the day. The stock hit a 52-week low of Rs 60.37 on 26 June 2014.

Shares of Mastek have risen 45.52% in six consecutive trading sessions from a recent low of Rs 140.60 on 18 June 2015.

The stock had underperformed the market over the past one month till 24 June 2015, sliding 56.03% compared with 0.81% fall in the Sensex. The scrip had also underperformed the market in past one quarter, sliding 54.14% as against Sensex's 1.53% fall.

The small-cap company has an equity capital of Rs 11.41 crore. Face value per share is Rs 5.

Mastek recently demerged its insurance products and service business into Minefields Computers, followed by slump sale of Offshore Insurance Operations by Minefields Computers (MCPL) to Majesco Software and Solutions (MSSIPL). MCPL was renamed Majesco India and it will be an independent listed company. Majesco India constitutes the insurance products and services business of Mastek. All the existing shareholders of Mastek will be allotted shares in Majesco India in the ratio of 1:1.

Media reports suggested that the current rally in shares of Mastek reflects investors' expectation of a strong potential to unlock value from the demerged insurance business after the approval by the shareholders of the US-based Cover-All Technologies on Monday, 22 June 2015, to merge with Majesco US, a subsidiary of Majesco India.

Cover-All Technologies Inc, a leading provider of innovative and modern P/C insurance technology solutions, announced on Monday, 22 June 2015, that its shareholders have approved the proposed merger of Cover-All with and into Majesco, a global provider of core systems and services to the insurance industry, with Majesco continuing as the surviving entity.

With the approval of the Cover-All shareholders, Majesco US is reportedly set to list on the NYSE-MKT, earliest by 29 June 2015. The listing will help the company to access cheaper capital needed for fast expansion in the US property and casualty (P&C) market. This should help the valuations of Majesco India, which holds 69.7% stake in Majesco US. Majesco India is expected to debut on Indian bourses in August 2015, added reports.

The development will have a positive rub off effect on Mastek's stock since it holds 13.8% in Majesco US, reports added.

On a consolidated basis, Mastek's net profit fell 25.98% to Rs 6.44 crore on 2.15% increase in net sales to Rs 272.32 crore in Q4 March 2015 over Q3 December 2014.

Mastek is a IT player with global operations providing enterprise solutions to insurance, government, and financial services organizations worldwide.

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