Majesco Limited - looking Forward

(Anandca09) #84

Analyst on Majesco listed on NYSE
What are analysts saying about Majesco stock?

Here are some recent quotes from research analysts about Majesco stock:

  1. Maxim Group analysts commented, “We reiterate our Buy rating and $8 price target as we argue MJCO is poised to post an accelerated top-line growth rate.” (5/23/2017)
  2. According to Zacks Investment Research, "Majesco is a technology solutions company. The Company provides software products, consulting and services to the insurance industry. Majesco is based in New York, United States. " (1/24/2017)

(Anandca09) #85

1001223636.pdf (424.0 KB)
Fiscal 2017 Fourth Quarter Earnings Conference Call New York Stock Exchange

(Anandca09) #86

Check this link out, management is buying shares from open market at regular intervals.

Investor presentation September 2016
1001214673.pdf (2.2 MB)

(Kumar Saurabh) #87

The amount is way too less.10-15 lakh rs .As per latest hdfc report, they r expecting some tier 1 deal pipeline conversion. Let’s see. Disc :holding, no trades in last 6 months

(bbbhutra) #88

Majesco has been selected by a leading provider of financial protection benefits globally, to transform their collections operation across multiple geographies.

Majesco, USA, the insurance arm and a subsidiary of Majesco announced about the selection of the Majesco CloudInsurer platform by a leading provider of financial protection benefits globally.

“In the first phase, they will implement Majesco Cloudlnsurer to modernize their collection operations in one country to be followed by other Latin America countries and additional territories in the Middle East and Asia,” as per company release.

Prateek Kumar, EVP of the P&C and L&A and Group business at Majesco said, “We are honored to add this premier insurer to our growing customer community. We are committed to providing the market with exceptional solutions that help them achieve their growth strategies.”


MJCO (US subsidiary) results are out.

Bottom line: Order backlog the only bright side

Key points:
Revenue decline continues. Total revenue declined 14.2% y/y. Management guides to sequential revenue growth from 2Q.

Margins are down for the quarter as they were ramping up for 2Q, and is expected to come back to normal levels in this quarter.

Cloud revenue (~25% of revenues) continues to grow +23% y/y; management also noted that recurring cloud revenue increased 56%y/y.

The 12-month order backlog increased by 21% y/y to $77M and they also signed a 10yr cloud subscription deal with IBM (part of previously announced partnership) with a potential subscription value over $35M.

Press release:

Recorded conference call:

(vishal kumar) #90

Big names are entering :-

22-JAN-2018 MAJESCO Majesco Limited RELAN AJAY KUMAR BUY 120000 550.69

(Parag) #91

Majesco has signed 4 deals so far this quarter

  1. Reliance Nippon Life – Product- Majesco Distribution Management; This looks on-premise sale.

  2. [Leading Insurer in Malaysia - Products- Mastek Digital Solution - This looks on-premise product sales.

  3. Kookmin Best Insurance Company Selects Majesco CloudInsurer This looks a full suite- Majesco Policy for P&C, Majesco Billing and Majesco Claims as well as Majesco Enterprise Data Warehouse

  4. Raffle Insurance- Full suite on Clouds -Majesco’s Health Core platform will provide RHI with a single cloud platform to manage, administer and service their individual and group insurance. This Health Core platform is available only in APAC region.

Looks like Majesco Q4 will be one of the best quarter (apart from Q3 Fy18 where they have signed ten customers). Good things they are acquiring customer both on clouds as well as on-premise sides.

Majesco has announced four deals so far in Q4, and going by the last few quarters they may/ may not announce all deals. So it is likely that they may few more client sign this Q4.

In Q3 conference call, the management has indicated that Q4 will also be good. Looks are things are falling into place as far as acquiring new customers is concerned.

Dis- Invested.

(Parag) #93

Few more bits

I think worst may be over for Majesco in term of customer acquisition and revenue growth, but Majesco is unlikely to report consistent profitability in next few quarters. Here is my question to management in Q2 FY18 (US)

Management talked about at least 12 months away from consistent profitability in Oct, so hopefully, by (Q2-Q3) FY19, they will report consistent/double-digit profitability. But I have seen last few quarters have seen a clear turnaround in a positive sense.

In Q4 FY16, Majesco ramped up the sales team and management has set an ambitious goal of reaching $200 million by FY18 (I know they are way off from that now). In a subsequent quartes, they indicated that the sales cycle is long and it takes around 12 to 18 months before a deal is signed with a customer. I think increased sales team hasn’t delivered clients deal in a times frames the management had indicated. But based on the current deal’s announcements, I have a feeling that sales activities are beginning to deliver results. Hopefully, it will continue.

I think subscription revenue is the key to consistent profitability. Currently, subscription revenue is around 9%. In my view when it reaches 12-14, it will be more or less equal to R&D expenses. Management has indicated that the R&D is a kind of fixed cost. In fact, if they manage to increase the sale at a good pace, R&D as a percentage will go down on it own.

The current Market cap is around 1400cr. Majesco has raised 240cr plus they have cash and cash equivalent of 110cr in their book. It means that 25% of the company’s value is in cash. And Majesco is not burning money as such. Operationally, they are generating profit, but it is not meaningful. It means a significant portion of the 350cr, is available for M&A activities.

M&A- Instead of making one big acquisition of $30-$40 million, Majesco may go for two acquisition (I have no knowledge, I am just speculating). It may give them more customer to cross-sell their products. Guidewire is acquiring companies very aggressively in last few years, so Majesco needs to move swiftly.

I am trying to validate one assumption about cloud profitability. Majesco management has indicated in the past that first three years of the cloud contract are not profitable. However, the real profitability will start after year four onwards. I am investigating if that assumption still holds true. Maybe this is a question for a next con call. However, if anyone has an idea/article on profitabilities on cloud business in general, please feel free to share.

Overall, how many customer they acquire in the next few quarters along with M&A will decide the directions for the company.

Disc- Invested, hence my view could be biased.

(Vilas D'Souza) #94

Yeah. Key things:

  1. Profitable execution
  2. Ideally no capital dilution
  3. 15-20% cagr growth in cash flows over 10-15 years.

Is that achievable at all?

(Divyanshu Taneja) #95

Zensar enterd in us insurance segment by a recent acquisition , stated want to be at where guidewire is , alarming bells for majesco

(Parag) #96

Insurance product business is vastly different from other financial products like banking. Hence, one would see many product companies in Banking and far fewer in Insurance space. This has been the case for many years now.

Guidewire started with the focus on Insurance product, I think around 12-15 years back and became the major player. Majesco has a long history of being in the Insurance product business (more than 20 years), but they are the late entrant in the US market. They started their US business with the focus on product, I think around 12-13 years back. It took Majesco quite a while to make an impact in the market and now, they are leading player in US insurance product market.

For a new player to enter into the US insurance product business is not an easy task considering many insurance companies are seriously thinking towards moving towards clouds business. The payoff in cloud business is 4 to 5 years down the line, so someone should be willing to invest millions of dollar today to make an impact and acquire a customer and reap benefit five years down the line. Also, insurance is a sticky business and clients are unwilling to change their core product very often, so the new entrants will find it tough to acquire new product customer.

If I read the Zenser press release “Cynosure focuses on providing Guidewire platform implementation services to Property and Casualty (P&C) insurance carriers and clocked revenues of about USD 20 million in 2017. ”

This suggests to me that Cynosure is an implementation partner for Guidewire and Zensar paid around 1.6 times revenue for this acquisition. Bear in mind that there are many implementation partner for Guidewire and Cynosure is one of them.

Keeping these in mind, I doubt if there is an impact on Majesco as Cynosure does not seems to have their own product (I must confess that I do not have much info on Cynosure and I could be wrong).

In term of valuation, Zensar has paid 1.6 times revenue for the company. I think if someone is to acquire Majesco, which is the third player in US insurance market, and has more than 160 +customer(with 35 customers already using their cloud business), they will have to pay much more than 1.6

(Divyanshu Taneja) #97

Amansa capital now owns around 4%, ashish kacholia exited , no info about ajay relan

(Divyanshu Taneja) #98

I was wondering why ashish kacholia exited just when good results will start coming or run in prices of majesco could start

(Parag) #99

Majesco US has declared a result. Here are my notes from the conference call.

  • IBM partnership is going on well. They are talking to a lot of Tier 1/Tier 2 customers in the US as well as internationally. A couple of deals are in advance stages; however, it is not certain when/if they will close.
  • IBM deal is L&A (Life and Annuity) as well as P&C. The first deal is in LA, but they are actively pursuing the P&C opportunity as well.
  • MetLife is likely to go live in the second half of the year. Maybe one more quarter of implementation revenue. I think once it goes live, it will be reference implication for a new client in IBM cloud platform.
  • Total revenue of using the cloud-based software is 1.5 to 2x of on-premises revenue (over five years). This could be due to the client accepting most of the off the shelf functionality, requiring less customization. Guidewire in one of the recent conference calls, indicated total revenue from cloud-based is around 3 to 4 times on premised revenue.
  • Cloud implementation takes around 3 to 6 months and they are trying to make it even faster.==> Taking into account last quarters and this quarters client win, by Dec 2018, Majesco may have around 45- 50 cloud customers (37 currently).

Overall, good quarters. Deal or two on IBM platform will be game changes, hopefully in the second half of the year. Majesco is already seeing the benefit of associating with IBM, in their non-IBM deals as per their press reports.

MetLife going live will also be a key milestone for Majesco. In a short-term, it may reduce the implementation revenue, but it will give a big boost to subscription revenue. One of the components of subscription revenue is the amount of premium written by using the system. MetLife is a one of the Top insurance, may end up using decent size premium (from Majesco’s point of view) on the product increasing the subscription revenue.

(Divyanshu Taneja) #100

Does anyone can share the pdf report of majesco or from where i can get report by various financial services company on majesco

(Parag) #101

There is an old report from ICICI Direct hope it helps.
I know HDFC Sec is also upbeat about Majesco, but could not find the report.

Majesco will declare Q4 next week and you may get a new updated report from ICICI/HDFC Sec.

(James Sebastian) #102

Results summary:

Majesco Q4FY2018 Revenue at Rs 216.7 crore; up 4.5% QoQ and 14.3% YoY
Cloud Revenue at Rs 67.9 crore; up 6.4% QoQ and 89.6% YoY
Adjusted EBITDA margin at 9.4%; up 298 bps QoQ and 601 bps YoY

detailed results:

(Divyanshu Taneja) #103

Does anybody noticed it case of rs 64 cr 10 times higher , stated that this news is about 5 months old

(niravacharya) #105

they already have insurance for this :grinning: