Buy Zensar Technologies; target Rs 165: Sunidhi Securities

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Buy Zensar Technologies; target Rs 165: Sunidhi Securities

Sunidhi Securities is bullish on Zensar Technologies (ZTL) and has recommended buy rating on the stock with a target price of Rs 165 in its November 30, 2011 research report.

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Sunidhi Securities is bullish on Zensar Technologies (ZTL) and has recommended buy rating on the stock with a target price of Rs 165 in its November 30, 2011 research report.

"Zensar Technologies (ZTL) has launched an improved version of SmartShop' a complete retail management software solution for emerging markets available as a packaged product, ready to install and use for the entire retailer spectrum- small store to medium/large chain of outlets. It has also introduced AutoZenics, a web-enabled system that enable SME clusters to take advantage of cloud computing capabilities. Other innovative solutions include the Supply Change Transaction Management- Xchange an online portal built for smooth document exchange and understanding between the enterprise and different suppliers, a multichannel insurance solution and Tzen a testing solution hosted on the cloud are the other innovations that ZTL has built."

"The India IT sector has aggregated revenues of USD 88.1 billion in FY2011, with the IT software and services sector (excluding hardware) accounting for USD 76.1 billion of revenues, up 19% (YoY). Within exports, IT Services segment was the fastest growing segment, growing by 22.7 per cent over FY2010, and aggregating export revenues of USD 33.5 billion, accounting for 57% of total exports. Indian IT service offerings have evolved from application development and maintenance to emerge as full service players providing testing services, infrastructure services, consulting and system integration. There is also a growing customer acceptance of Cloud-based solutions which offer best in class services at reduced capital expenditure. By 2020, new segments (SMBs), new verticals (Public sector and Defense, Healthcare, Utilities, Printing and Publishing) and new geographies (BRIC) is expected to account for 50-55 per cent growth in the addressable market. Suitably exploiting these emerging opportunities both in the global and domestic markets will enable Zensar to meet its target of doubling revenue in the next three years."

"ZTL is now restructured on vertical lines with five global profit centres for 2011-13. The verticals of Manufacturing, Retail, Banking and Financial Services, Insurance and Connected Services (Healthcare, Government, Utilities and Transportation) will bring significant consulting expertise on the domain and will present both solutions and services to enable customers to leverage best in class technologies and processes for competitive advantage. Akibia acquisition consolidates ZTL's presence in the rapidly growing infrastructure management business. According to industry sources, Infrastructure Management Solutions (IMS) is a $370 billion market, split into Data Centre services ($231billion), Remote Infrastructure Management ($108 billion) and Managed Services ($31billion)."

"ZTL continues to focus on alternative IT models - Cloud, on-demand services and SaaS - in order to reduce hardware infrastructure costs and provide scalability on demand for customers across segments. ZTL targets to become a $1billion IT business major by 2016 for which is undertaking a major business transformation by moving into new areas of IT outsourcing services and rejigging operations. ZTL is committed to continue creating the cash flow and investing it back into the business for better IPs, capability acquisition and other strategic investments. Its 75% revenues come from Fortune 500 companies; 10% from Fortune 1000 companies and 15% from SMBs. It is among global top 50 outsourcing companies and aims to become one of the top 10 India based global IT and BPO firms. ZTL's expansion into new edge technologies, cloud computing, analytics and mobile and social media solutions are avenues for significant opportunity for revenue growth. At the CMP of Rs 125, the share is trading at a P/E of 3.8x on FY12 earnings. We recommend BUY with a target price of Rs 165 in the medium term," says Sunidhi Securities research report.

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To read the full report click on the attachment