Buy Zensar Technologies Limited For Target Rs. 290 - Anand Rathi Share and Stock Brokers
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Q3-FY23 Result Update
* Zensar Technologies Limited (ZENSARTECH) has reported consolidated revenue of ?11,976 million in Q3-FY22 as against ?11,025 million in Q3-FY22. In US dollar terms the revenue growth was negative 0.8% YoY and negative 5.9% QoQ at $145.9 million. The softness was due to the deceleration in the demand environment leading to client’s deferring discretionary spend and scaling back budgets.
* On profitability front, the company’s consolidated EBITDA margin stood at 11.3% at ?1,349 million in Q3-FY23 as against 14.4% at ?1,585 million in same quarter previous year. The consolidated profit after tax (PAT) margin for the company stood 8.9% at ?1,061 million as against 8.3% at ?914 million in same quarter previous year. The operating margins during the quarter were lower due to higher operating expenses.
* On segment basis, Banking reported sequential Q-o-Q growth of 7.4% on constant currency basis while Hi-tech, Manufacturing, Insurance, Consumer and Emerging posted de-growth of 4.9%/7%/10.3%/2.3% and23.9% respectively on QoQ basis. The decline was mainly attributable to factors like delay in decision making, forward shifting of milestones, furloughs and macro demand uncertainties. The order book for the quarter ended Q3-FY23 stood at $130.5 million, supported by healthy renewals and multiple wins across verticals.
* During the quarter, ZENSARTECH has also won significant four deals in Application development services, along with data engineering and data services mandate in US, South Africa, UK etc. During the quarter, the company scaled two clients to the $10 million-plus bracket.
* In terms of guidance, the management has not given specific guidance however it is confident of scaling back revenues to normal levels going ahead and a healthy pipeline of orders along with gradually improving margins to augur well in medium term.
* We have incorporated latest quarterly numbers for ZENSARTECH and have revised our estimates for the company in terms of both revenues and earnings. We continue to remain positive on the company for medium to long term, we maintain our rating to BUY with a revised target price ?290 per share.
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