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IDBI Capital Report
Zensar Technologies Ltd.'s Q3 revenue growth was impacted by furloughs in hi-tech. Going forward, we expect the company's revenues to improve led by reversal of furloughs and improving deal wins trajectory (up 28% YoY, book to bill of 1.2 times).
This coupled with company's intention to invest in capability building, sales and large deals, we expect 12% YoY growth each for FY25E and FY26E.
In addition, considering nine months-FY24E performance we have revised margin estimates for FY25E upwards by 52 bps leading to earnings per share upgrade of 2.2%.
However, considering recent run up in price we maintain 'Hold' rating on the stock with a revised target price of Rs 605 (18 times FY26E EPS, introduced FY26 estimates, previous target price Rs 530).
We believe key trigger for further re-rating will be sustaining growth for next few quarters.
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