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HDFC Securities has buy call on with a target price of Rs 600. The current market price of Zensar Technologies is Rs 401.65. Time period given by analyst is year when Zensar Technologies Ltd. price can reach defined target.
Zensar Technologies Ltd., incorporated in the year 1963, is a Mid Cap company (having a market cap of Rs 9282.01 Crore) operating in IT Software sector.
Zensar Technologies Ltd. key Products/Revenue Segments include Software Development Charges & Other Services and Software Products for the year ending 31-Mar-2021.
Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 1126.60 Crore, up 4.95 % from last quarter Total Income of Rs 1073.50 Crore and up 19.95 % from last year same quarter Total Income of Rs 939.21 Crore. Company reported net profit after tax of Rs 92.40 Crore in latest quarter.
Investment Rationale
The brokerage maintains BUY on Zensar, following an in-line revenue performance and better-than-expected margin delivery coupled with healthy deal wins. Zensar delivered growth of 4.7% QoQ CC, supported by healthy growth in the BFS (+22.4% QoQ CC) and consumer (+9.6% QoQ CC) verticals. The TCV stood at USD 125.2mn in Q3 and, excluding the large City of San Diego deal in Q2, it improved by ~30% QoQ. The hi-tech vertical was impacted by furloughs and will return to growth trajectory. The investments in the BFSI/retail vertical are yielding results and will be the prime revenue driver. The margin profile has been volatile and was impacted by higher sub-con and rising employee costs.The management expects EBITDA margin to stabilise in the mid-teens; higher fresher intake and near-shore locations will reduce dependence on subcontractors and increase utilisation. The brokerage reduces EPS estimates by 6/4% for FY23/24E, to factor in the lower margin. The TP of INR 600 is based on 24x FY24E EPS. The stock is trading at a PE of 22.2/16.4x FY23/24E EPS, a discount of ~40% to tier-2 IT.
Promoter/FII Holdings
Promoters held 49.1 per cent stake in the company as of 31-Dec-2021, while FIIs owned 17.81 per cent, DIIs 14.09 per cent.
Zensar Technologies Ltd., incorporated in the year 1963, is a Mid Cap company (having a market cap of Rs 9282.01 Crore) operating in IT Software sector.
Zensar Technologies Ltd. key Products/Revenue Segments include Software Development Charges & Other Services and Software Products for the year ending 31-Mar-2021.
Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 1126.60 Crore, up 4.95 % from last quarter Total Income of Rs 1073.50 Crore and up 19.95 % from last year same quarter Total Income of Rs 939.21 Crore. Company reported net profit after tax of Rs 92.40 Crore in latest quarter.
Investment Rationale
The brokerage maintains BUY on Zensar, following an in-line revenue performance and better-than-expected margin delivery coupled with healthy deal wins. Zensar delivered growth of 4.7% QoQ CC, supported by healthy growth in the BFS (+22.4% QoQ CC) and consumer (+9.6% QoQ CC) verticals. The TCV stood at USD 125.2mn in Q3 and, excluding the large City of San Diego deal in Q2, it improved by ~30% QoQ. The hi-tech vertical was impacted by furloughs and will return to growth trajectory. The investments in the BFSI/retail vertical are yielding results and will be the prime revenue driver. The margin profile has been volatile and was impacted by higher sub-con and rising employee costs.The management expects EBITDA margin to stabilise in the mid-teens; higher fresher intake and near-shore locations will reduce dependence on subcontractors and increase utilisation. The brokerage reduces EPS estimates by 6/4% for FY23/24E, to factor in the lower margin. The TP of INR 600 is based on 24x FY24E EPS. The stock is trading at a PE of 22.2/16.4x FY23/24E EPS, a discount of ~40% to tier-2 IT.
Promoter/FII Holdings
Promoters held 49.1 per cent stake in the company as of 31-Dec-2021, while FIIs owned 17.81 per cent, DIIs 14.09 per cent.
(Disclaimer: Recommendations given in this section or any reports attached herein are authored by an external party. Views expressed are that of the respective authors/entities. These do not represent the views of Economic Times (ET). ET does not guarantee, vouch for, endorse any of its contents and hereby disclaims all warranties, express or implied, relating to the same. Please consult your financial adviser and seek independent advice.
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