Zensar Technologies Ltd. share price target

Background: Zensar Technologies is an RPG Group company, with end-to-end services from IT development to business process outsourcing. In 2QFY17: company has domain expertise in Application Management Services (76.7%), Infrastructure Management Services 23.3%).The Company's business is primarily classified into Manufacturing (51.8%), Retail & Consumer services (25.7%), BFSI (18.1%), and Emerging (4.5%). The company's business is spread across USA (75.1%), Europe (9.9%), Africa (8.6%), and Row (6.4%). It receives 66.2% of revenues from onsite and 33.8% of revenues from offshore. Fixed price contracts...

ZENT has been taking several transformation measures post the recent investor and leadership change. The key ingredients of its strategy are: [1] Focus on Digital, [2] Attention towards 65 key accounts, and [3] Rejigging presence in Infrastructure Management (IM) towards Services and Cloud. While the first two are revenue drivers, the third leg of its strategy is a driver of margins. Progress in these areas has been substantial, but simultaneous pruning of low-yield accounts and trimming of the Product business is likely to limit revenue growth at 5% in FY17. The churn in the portfolio lays a better foundation for growth beyond FY17, driving our estimate of 12% revenue growth in FY18. This should be seconded by margin expansion from scaling up of newer areas and reconstitution of IM portfolio.They see potential for growth acceleration and stock re-rating. Maintain Buy, with a price target of INR1,300, which discounts forward earnings by 13x.

 

Zensars 1Q revenue and margins were steady, even as peers struggled to deliver. We believe the company is on the right track with strong digital capabilities (~27.3% of revenue, second highest after Mindtree) and higher exposure to non-stressed verticals such as manufacturing and retail (~78% of revenue).

Background: Zensar Technologies is an RPG Group company, with end-to-end services from IT development to business process outsourcing. In 1QFY17: company has domain expertise in Application Management Services (77.2%), Infrastructure Management Services (22.8%).The Company's business is primarily classified into Manufacturing (54%), Retail & Consumer services (24%), BFSI (18%), and Emerging (4%). The company's business is spread across USA (74.9%), Europe (10.5%), Africa (8%), and Row (6.6%). It receives 68.4% of revenues from onsite and 31.2% of revenues from offshore. Fixed price...

Zensar Technologies Limited - ZENSARTECH is a technology services provider with a portfolio spread across traditional to transformational solutions: Applications, Infrastructure, Digital and Industry-specific solutions. It is part of the USD3b RPG Enterprises and USD40b APAX portfolio of companies. ZENT has core strengths in Oracle implementations, eCommerce enablement and IMS & Cloud. Buy, 35% upside: Discounting FY18 earnings by 13x – at a discount to peers such as PSYS and MTCL (which have demonstrated consistency in performance and potential in newer services) but at a premium to peers such as MPHL, KPIT and NITEC (given strong positioning in Digital, potential improvement in performance, and prospects of industry-leading growth); and at a premium to historical median given improved performance, sharper positioning and defined expertise – would lead to a target of INR1,300, implying a 35% upside.

Trendlyne has 4 reports on ZENSARTECH updated in the last year from 3 brokers with an average target of Rs 1202.7. Brokers have a rating for ZENSARTECH with 1 price upgrade in past 6 months.

Zensars 4QFY16 missed revenue and margin estimates owing to the ongoing restructuring in the IMS and product & license business. The business is on the right track with strong digital capabilities (~27% of revenue, up 25% YoY). Zensar?s new target is to become an Oracle-managed partner for cloud and digital solutions (instead of a diamond partner). We believe this is achievable and can drive another growth cycle.

Background: Zensar Technologies is an RPG Group company, with end-to-end services from IT development to business process outsourcing. In 4QFY16: company has domain expertise in Application Management Services (77%), Infrastructure Management Services (23%).The Company's business is primarily classified into Manufacturing (54%), Retail & Consumer services (24%), BFSI (18%), and Emerging (4%). The company's business is spread across USA (78%), Europe (10%), Africa (8%), and Row (6%). It receives 64% of revenues from onsite and 64% of revenues from offshore. Fixed price contracts revenue share is 53% and Time &...

Background: Zensar Technologies is an RPG Group company, with end-to-end services from IT development to business process outsourcing and consulting & implementation. Zensar's has 8,192 employees, serving 400+ clients in 29 countries. Zensar is the world's first enterprise-wide SEI CMM level 5 company. The company has domain expertise in Application Management Services (71%), Infrastructure Management Services (18%) and Product & License (11%).The Company's business is primarily classified into Manufacturing, Retail & Distribution (66%), BFSI (19%), Govt. Healthcare & Ut ilities (5%) and Alliances & Others (10%). The company's business is spread across the USA (75%), Europe (12%), Africa (7%), and Row (6%). It receives 66% of revenues from on-site and 34% of...

Zensar Technologies is an RPG Group company, with strong IT services and digital capabilities. Its key focus area is digital, which has risen from 5% of revenues to 26% over three years. We expect growth to be led by (1) Focus on digital/SMAC, (2) Strong relationship with Oracle, aided by the acquisition of Professional Access (PA), (3) All time high deal pipeline of US$ 592mn (enterprise ~70% and IMS 30%) of which ~25% is digital

Digital space is the key revenue driver for the Zensar. SMAC (Social, Mobility,Analytics and Cloud) is increasingly paving the model for businesses in the future. Digital transformation is driving the market as witnessed with the global e- commerce market growing at 20% reporting revenues in 2014 totaling US$1.3 Tn. Zensar is growing rapidly, organically and inorganically, in platforms such as digital and cloud. We are expecting the digital revenues to increase by 15% in FY16E and 20%in FY17E; and growth of total revenues by CAGR of 14%.