Zensar Technologies' newest acquisition would not be margin dilutive in this fiscal year. Management re-iterated on investing in capabilities and sales team whenever there is an opportunity.
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Despite the seasonality impact in banking, financial services and insurance (-1.3% QoQ) and shutting down impact of few clients in technology, media and telecommunications (-3.5% QoQ), Zensar Technologies Ltd. reported a revenue of $157 million, up by 0.7%/8.6% QoQ/YoY in CC terms.
Seasonality was offset by growth in manufacturing (6.5% QoQ) and healthcare verticals (3.2% QoQ). Management is positive to grow in the next quarter backed by the highest order bookings in this quarter ($205.3 million; +2% QoQ) and their account mining efforts. However, management seem to be cautious on the demand environment with the prevailing uncertainty around global macros. Having said that, management also stated discretionary spend intensity to be nearing the pre-covid levels which indicates better spending environment on client's side.
We expect, company to continue its growth momentum backed by the revival (BFSI) in demand zone. However, with recent run up in the price, we downgrade the stock to Hold rolling into FY27 at target price of Rs 792 (22 times FY27E EPS) versus previous target price of Rs 760.
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