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Reliance Securities
Majesco (Buy)
CMP: ₹560.1
Target: ₹667
Majesco Ltd’s stock rose by 3.9 per cent and 5.37 per cent on Friday and Monday respectively.
The company reported strong 2QFY18 results on the revenue front, which rose 8.8 per cent q-o-q in dollar terms, led by strong order book growth seen in 1QFY18 (over 20 per cent q-o-q); cloud revenue rose 28 per cent q-o-q, aided by the key IBM partnership.
Good revenue growth helped in 395 bps q-o-q rise in EBITDA margin.
Industry fundamentals and the key IBM partnership will enable Majesco to boost revenue growth going forward.
Cloud offering — Potential ‘Trump Card’: 60-70 per cent of the deal pipeline in the past few months has been for cloud services.
Of the addressable market of $25 billion for Majesco, around $15-16 billion relates to the L&A market, while $9.25 billion relates to the US P&C market. We currently have a target price of ₹667 on the stock.
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