In term of promoters pledging, I am not too worried about it. Most, or maybe all promoters have a shareholding in Mastek and Majesco. So one or more of them may have used funds to increase shares in Majesco by pledging Mastek share. I have observed company management over many years, and I have not found anything to suggest their integrity. Mastek might not have grown rapidly in the past, but in term of management integrity, they are at the top league.
Mastek has bought a company Evosys in Feb 2020, and it is a big transaction for Mastek. They have paid around $90-100 million for the company. As part of the transaction, they paid cash to the tune of $60-65 million and the cash was raised through debt. As Mastek has a global presence and 90% or more of their income coming outside from India, they get access to the cheap global funds. I reckon the cost for the Rs 300 cr+ debt will be less than 4% per annum, which is not bad.
Bear in mind that they have cash and cash equivalents of Rs 300 cr + Majesco stake valued around 80 cr as on today. So if they wish they could repay the full debt, instead they prefer to keep the cash.
Evosys acquisition could be the game-changer. In the current quarters, approximately two months of revenues have added 12 cr of Profit in Q4. Barring Covid-19 situation, I won’t be surprised if they start reporting 50 cr PAT for each quarter within next 3/4 quarters once COVID situation improves.
Note- Figure mentioned above are are approximate. Please refer to company publications for exact numbers