Zensar Technologies Ltd. share price target

Zensar Technologies (ZENT) reported its best quarterly revenues – at US$153.2mn, up 4.1% QoQ USD, beating our estimate of 3%. In CC terms, revenues grew 4.2% QoQ and 28.5% YoY. FY22 growth was 15.3% YoY. Though inorganic growth was not called out separately, management stated that at the time of acquisition, M3bi had a quarterly revenue run-rate of US$7.5mn so it translates into organic growth of 11% YoY in FY22.

We recommend a BUY on Zensar, aided by strong revenue growth momentum and better recovery. We assign 14.8x P/E multiple to its FY24E earnings of Rs. 24.25 per share to arrive at a TP of Rs 360 per share, implying an upside of 25% from CMP.

all companies in NIFTY IT Index, several mid-cap, small cap IT firms and new age internet players. Management commentary across companies indicate that strong demand environment is expected to continue over medium term and revenue growth is no longer contingent on winning large deals. Pricing environment has also improved. Additionally, companies are doing aggressive fresher hiring resulting in pyramid balancing which will provide considerable margin tailwinds in FY23....

Background: Zensar is a leading digital solutions and technology services company that specialises in partnering with global organizations across industries on their Digital Transformation journey. A technology partner of choice, backed by strong track-record of innovation; credible investment in Digital solutions; assertion of commitment to client's success, Zensar's comprehensive range of digital and technology services and solutions enable its customers to achieve new thresholds of business performance. Zensar, with its experience in delivering excellence and superior client satisfaction through myriad technology solutions, is uniquely positioned to help them surpass challenges around running their existing business most efficiently, helping in their legacy transformation, and planning for business...

What should investors do? Zensar's share price has grown by ~2.7x over the past five years (from ~| 170 in January 2017 to ~| 410 levels in January 2022). We continue to remain positive and retain our BUY rating on the stock. Target Price and Valuation: We value Zensar at | 525 i.e. 20x P/E on FY24E...

Zensar (ZENT)'s 3QFY22 performance of 4.7% QoQ CC revenue growth and a 14.3% EBITDA margin was encouraging, although expectations were modest for the furlough-hit 3Q. The company delivered a decent deal TCV of USD125m, 0.8x book-to-bill, indicating continued strength in the deal pipeline from a combination of small- and medium-sized deals. ZENT's good 3QFY22 performance in a seasonally weak quarter reinforces our view that its new sales-led strategy should help the company return to the high-teen organic growth path in FY23E. We estimate USD revenue...

4.7% QoQ CC. M3bi quarterly run-rate is expected to be ~$9 mn. Growth was driven by strong performance in Banking (+19.8% QoQ USD) aided by M3bi contribution, Retail (+8.4% QoQ USD) and Emerging verticals (+58.2% QoQ USD) led by ramp up of large San Diego deal. Performance was weak in...