1 ZENSARTECH share price target reports by brokerages below. See what is analyst's view on ZENSARTECH share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
UNCERTAINTY PERSIST IN NEAR TERM, RECOVERY IN LONG-TERM Zensar Technologies Ltd (Zensar) reported a sluggish growth in Q4 FY20 due to COVID outbreak. Revenue stood at Rs. 1017.8 crs down 2.8% YoY and 0.3% QoQ. Operating profit showed a growth of 2.6% YoY at Rs. 100 crs while operating margin declined by 70 bps at 9.8% than due to pricing pressure and lower utilization. Net profit for Q4 FY20 stood at Rs.69.5 crs reported a de-growth of 20.1% QoQ. The management expects short term uncertainty in all the major verticals like Hi Tech, Manufacturing, Retail & Consumer, BFSI verticals and across geographies in near term. Zensar showed a strong recovery since onetime expenses in Q3 FY20. Zensar management is expecting weak recovery or tepid growth in H1 FY20 aided mainly by COVID-19 outbreak and expects recovery in H2 FY21.
Elusive quest for growth Zensar registered strong margin recovery (+705bps QoQ) but revenue decline was higher than estimate. The deal pipeline continues to be robust (USD 1bn) but TCV has slowed down (-25% YoY) due to Covid-19 related uncertainty. Digital is the key revenue driver but Legacy drag (-9.7% in FY20) is weighing on growth. Delay in decision making, pricing pressure, cut in discretionary spending and high exposure to Hi-Tech, Manufacturing and Retail will pose growth challenges in FY21E. We cut our FY21/22E rev est. by 5.7/5.8% to factor uncertainty. Increase FY21/22E EPS est. by +2.2/+3.9% due to margin reset. Our TP of Rs 98 is based on 8x (~30% discount to 5Y avg.) FY22E EPS. Maintain ADD
Zensar is well placed in terms of providing IT services in the digital space. Further, focus on large deal wins and mining of top 50 clients bodes well for revenue growth in the long term. In addition, growth in digital and cloud infrastructure services along with operating leverage would boost margins. Although this quarter was a disappointment, we expect improving signs to be visible from next quarter onwards (management indicated to reach industry level revenue growth in FY21E and margins of 14-15% in medium term). Consequently, the company is expected to register revenue and PAT CAGR of 8.5% and 12.5% over FY19-21E, respectively. Hence, we maintain BUY rating on the stock with target price of Rs 205/ share (~10x PE FY22E).
Zensar is well placed in terms of providing IT services in the digital space. Further, focus on large deal wins and mining of top 50 clients bodes well for revenue growth in the long term. In addition, we expect higher organic growth, divestment of non-core business and scale in large deals to boost margins. Consequently, the company is expected to register revenue and PAT CAGR of 11.7% and 15.6% over FY19-21E, respectively. Considering the robust growth, we have a BUY recommendation on Zensar and assign a P/E multiple of ~11x (PEG of 0.6) leading to a target price of Rs 210/share.
The slowdown in the key business vertical viz. CIS may impact revenue upcoming quarters in the near terms. However total deal wins remained strong with $1bn which will aid higher growth momentum in longer run. We remainbullishonthebusinesstoregainitsmomentumbackedbylargedealswinsinlongerrun. Weassign11.3x P/E multiple to its FY21E earnings of Rs. 18.9 per share which gives a target price of Rs. 214 per share, an upside of 15%.
Factoring Q2FY19 performance, we have lowered our estimates to Rs 10.4 (earlier Rs10.8) and Rs 11.5 (earlier Rs11.6) for FY20E and FY21E, respectively. We continue to maintain our positive view on CDSL’s business model, having anannuity based revenue stream (opportunity is emerging with demat of 60-65k unlisted public companies with negligible costs), new growth avenues of Insurance & Academics yet to start contributing, as MHRD yet to decide the final pricing decision (as per the management), robust cash flow generation coupled with a strong balance sheet (Net cash of Rs 7.07bn) and stable dividend policy. At CMP, the stock is trading at 19.8x/17.9x FY20E/FY21E earnings. Given the limited upside, we recommend ADD (earlier BUY) with a revised target price of Rs223 (earlier Rs225), valuing CDSL on SOTP basis.
Zensar Ltd is well positioned in terms of providing IT services mainly targeting Digital services. The specific focus on verticals like manufacturing, Insurance and Retail will help to Zensar to gain higher growth momentum. When computed over FY19-FY21E, we estimate the company to post robust growth of 13% CAGR in revenues and 18% CAGR in earnings on the back of strong deal pipeline and higher demand for digital across geographies. We value Zensar Technologies Ltd at 13.8x FY21E (19.5/share) to arrive at price target of Rs.270 giving an upside of 23%
We expect Zensar to report an EPS of Rs.16.3/share in FY20E and Rs. 19.3/share in FY21E supported by strong deal pipeline. Revenue outlook remains strong on the back of the deal momentum of recent quarters. We maintain ADD rating with an unchanged target price of Rs.232. We have valued the stock at 12x PE on FY21E earnings, discount to its peers considering its size, financial performance, etc.
While we are positive about Zensar’s growth prospects given the strong revenue visibility in terms of strong growth in TCV and strong deal pipeline. We are also positive about Zensar’s focused strategy on it core areas of strength. However, we believe that margin improvement is still some quarters away, which might restrict upside movement in the stock. We rate Zensar “HOLD” with a target price of Rs. 242, upside of 12%. We value Zensar on 3-Yr historical average of 17.6x on FY21E EOPS of Rs. 13.8. Sustained weakness in Retail and slowdown in IT spending due to macro factors remain key risks to our call.
We expect Zensar to report an EPS of Rs.16.3/share (earlier Rs.16.7) in FY20E and an EPS of Rs. 19.3/share in FY21E (earlier Rs.19.8) supported by strong deal pipeline. Revenue outlook remains strong on the back of the deal momentum of the recent quarters. We maintain ADD rating with a revised target price of Rs.232 (Rs.267 earlier).
We believe execution holds the key to drive strong growth, which in turn will aid margin performance. Digital (48.5% of revenues) showed a sustained growth of 6.7% QoQ & 28.3% YoY on the back of clear focus on Automation driven by Cloud & Infrastructure platforms and RPA and we believe Zensar’s investment inReturn on digital is showing them results. We maintain our FY20E/21E USD revenue estimate and expects USD revenue and EPS CAGR of 13.4% and 20.8% respectively over FY19-21E. Our TP stands at Rs 260 (13x FY21E). The stock trades at attractive multiple of 13.3x/10.8x FY20E/FY21E EPS of Rs 16/Rs 20. Maintain Accumulate.
We remain positive on ZENT given a) strong digital capabilities aided by its Return on Digital (RoD) and RoD Next offerings. b) good revenue visibility with robust growth in TCV and strong deal pipeline and c) stable margin outlook with upside risks owing to increasing contribution of digital deals. We recommend “HOLD” on the stock with a target price of Rs. 270, and an upside potential of 13%. We value Zensar at PE of 18x on FY21E EPS of Rs. 15.6.
We are introducing FY21E earnings and roll-forward our valuation on FY21E earnings. We expect Zensar to report an EPS of Rs.16.7/share (earlier Rs.16.5/- ) in FY20E and an EPS of Rs. 19.8/share in FY21E supported by strong deal pipeline. Revenue outlook remains strong on the back of the deal momentum of recent quarters. We maintain ADD with a revised target price of Rs.267 (Rs.239 earlier).
We maintain BUY on Zensar post better than expected 4QFY19. Growth in TCV (+25% YoY) and robust deal pipeline of ~USD 1bn provides growth visibility. Our TP is Rs 305 implying 16x FY21E EPS. Zensar is one of our Top picks in Tier-2 IT.
Management highlighted demand environment continues to be strong. Focus on large deals is also improving the quality of pipeline with 60% of deals (Q3FY19: 55%) being contested with TCV over USD 10 mn+. Digital (46% of revenues) showed a sustained growth of 8% QoQ & 36% YoY and we believe Zensar’s investment in Return on digital is showing them results. We raise our FY20E/21E USD revenue estimate by 2.1%/2.2% on revenue beat in Q4. We expect USD revenue CAGR of 12% over FY19-21E. Our revised TP stands at Rs 260 (13x FY21E) vs. Rs 256 earlier, implying 6% upside from CMP of Rs 246.The stock trades at 15x/12x FY20E/FY21E EPS of Rs 17/ Rs 20. Maintain Accumulate.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
DISCLAIMER: Information is provided "as is" and solely for informational purposes, not for trading purposes or advice, and may be delayed. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and FrontPage will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein.