Mehul Bhatt of OysterRock Capital presented his in-depth investment thesis on Majesco Limited (NSE: MAJESCO) at Asian Investing Summit 2018.

Thesis summary:

Majesco serves the insurance vertical. It develops insurance software and has a well-received cloud platform. Majesco was a part of Mastek prior to a de-merger. The company offers end-to-end implementation and support, unlike some competitors who rely on systems integrators. Insurers depend on technology but their core IT systems are aging rapidly, causing problems. Insurers spend roughly $25 billion annually on IT products, platforms, and services. Majesco’s product suite includes a cloud offering, big data, and analytics.

While revenue is still modest at $122 million (2017), the company has made inroads into the insurance space and is recognized by Gartner as a top three player in insurance-related IT products, alongside DuckCreek and Guidewire.

Mehul views Majesco’s deal with IBM and MetLife as a “game changer”. Majesco has announced a five-year partnership with IBM to jointly offer a cognitive, cloud-based platform to insurance carriers. MetLife has joined the collaboration, paving the way for product innovation.

Mehul believes that Majesco’s recent market quotation understates value. Most of the investments in insurance products have been made upfront, and Majesco spends $15-20 million annually on R&D. The enterprise is attractively valued at less than 2x FY17 revenue (peer Guidewire trades at ~10x).

Listen to this session:

slide presentation audio recording

About the instructor:

Mehul Bhatt serves as Founder and Managing Partner of OysterRock Capital, a value-oriented investment firm. Previously, Mehul headed equity fund management for the portfolio management services business of HSBC Asset Management in India. Before that, he worked with Credit Suisse India Asset Management, where he managed discretionary equity and fixed income capital on the wealth management platform in India. Mehul is a mechanical engineer and a management graduate from the Indian School of Business.