Zensar Technologies (Zensar) reported healthy Q3FY21 results on the profitability front. The company's dollar revenues (excluding third party maintenance (TPM) business) decreased 2.4% QoQ to US$122.8 million mainly led by impact of Top client (in Hitech vertical) and closure of few deals in insurance. The company's EBITDA margins increased by 120 bps to 20.6% mainly led by SG&A optimisation partially offset by lower utilisation & volumes. The company has now become debt free in the quarter.
Valuation & Outlook
The company has made healthy improvement in margins and is expected to register improving margins in coming quarters. However, the company's revenues have been impacted due to deceleration in top client and deal closure. Further, despite healthy order book, conversion of revenues is still slower than expected. Hence, we downgrade the stock from BUY to HOLD with a revised target price of Rs. 260 (12x PE on FY23E EPS) (earlier target price of Rs. 280).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Zensar_CoUpdate_Jan21.pdf
Shares of ZENSAR TECHNOLOGIES LTD. was last trading in BSE at Rs.241 as compared to the previous close of Rs. 235.2. The total number of shares traded during the day was 44386 in over 1529 trades.
The stock hit an intraday high of Rs. 249.25 and intraday low of 235. The net turnover during the day was Rs. 10804017. |
