Reality Check - Zensar Technologies

Zensar Technologies: Above expectations

The stock of Zensar Technologies was up over 22 per cent last week, as its March quarter results exceeded market expectations. Zensar’s fourth quarter revenues were up 3.2 per cent sequentially and a healthy 14.2 per cent y-o-y in dollar terms. Profits were up 23.8 per cent sequentially. These numbers compared favourably with what many IT firms reported for the March period.

Digital services accounted for a substantial 40.6 per cent of the overall revenues for Zensar, which is among the highest in the industry.

Zensar has witnessed significant re-rating. While its fourth quarter results were above expectations, the company’s revenue increased only by 5.8 per cent in dollar terms during the fiscal, below trade body Nasscom’s projected rate of 7-8 per cent for the industry in FY-18. Zensar would, therefore, need to drive growth further to justify its trailing 12-month PE multiple of 23 times.

 

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