Profitable Stock to Watch for Trade in December - MAJESCO

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Majesco is a provider of core insurance technology software and IT services to insurance carriers worldwide. Majesco delivers software and IT services in core insurance areas including policy administration, product modeling, new business processing, billing, claims, producer lifecycle management and distribution.Majescoprvides technology solutions, products and services for the insurance industry across lines of business – Property & Casualty (General Insurance), Life, Annuity, Health, Pensions, and Group & Worksite Benefits insurance. The company focus on delivering business value and enhanced business capabilities to clients through a combination of world-class enterprise grade products in modern technologies, implementation services and specialized application services. 
  • The Majesco Named a ‘Visionary’ in Gartner’s Magic Quadrant for P&C Insurance Claims Management Module 
  • Majesco Positioned as a Leader in Gartner’s First Magic Quadrant for P&C Insurance Policy Management Modules 
  • Majesco Customer, AssureStart, Receives SMA Innovation in Action Award 

Fundamental Analysis 
The company has market cap of around 1308 crore and On the positive side, the company was able to report operating profit of Rs 1.7 crore after reporting operating loss of Rs 1 crore in the previous quarter. In addition, its net profit was Rs 1.5 crore compared with the loss of Rs 2 crore in the March quarter. The US market contributes nearly 89 per cent to its revenues, while the UK generates 7 per cent of the revenue. The company caters to 164 clients in the property and casualty (P&C) and Life & annuity segments. P&C contributes 80 percent Of the revenue. The company expects to clock revenue of $200-225 million by FY18 compared with $113 million in FY16. It also expects to improve operating margin before depreciation (EBITDA margin) substantially to 12-14 per cent from just over half a percent in FY16. Beta of the stock for one month range is 0.032. 
  • Company is virtually debt free which is very good for the financial health of a company. 
  • Net profit of the company has increased from 1.11 crore to 9.96 crore in last quarter 
  • Net sales of the company has increased from 4.50 crore to 5.13 crore in the last quarter 
  • Company has good ratio of promoter Stack which is around 50% 
  • Return on equity ratio has increased from 5.25% to 6.88% 
  • Return on capital employed ratio increased from -2.01% to 5.96% 
  • Operating profit margin increased from 1.8% to 6.19% 

Technical Analysis 
Majesco Performed very well in the second half of 2017 when it bottomed out around 300 in July, Since then it the stock almost doubled in its value. Since last two weeks the stock recovered again from its correction mode also formed bullish engulfing pattern on weekly chart. It gained nearly 80 points in the last two weeks and again heading to break recent monthly high. 
  • The stock formed a flag like structure on weekly chart, it is not very accurate but if break out comes with heavy volume it will work. 
  • The stock recovered earlier three times with the support of 14 day EMA and it works fine on weekly chart 
  •  590 is the monthly resistance and 470 is the strong support, price may come a little down near 530 once. 
  • 540 is the historical monthly support and the stock should not give weekly closing below this level. 21 day EMA on daily chart also supports the stock 

Buy Majesco between 530 and 550 for the target of 630-650 and maintain stop loss below 470 

Supports and Resistance (Monthly) 
  • Resistance 1- 590 Supports 1- 470 
  • Resistance 2- 650 Supports 2- 425 
  • Resistance 3- 735 Supports 3- 390 

MAJESCO WEEKLY CHART
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