Buy Zensar; target of Rs 1000: Motilal Oswal

Buy

Motilal Oswal's research report on Zensar

Zensar (ZENT)’s 3QFY26 revenue declined 1.3% QoQ CC (vs. our est. of a 1.7% CC decline). MCS grew 3.4% QoQ CC, while TMT/HLS dipped 8.7%/2.3% QoQ CC. Deal TCV: Bookings came in at USD180m (up 14% QoQ/down 12% YoY), and the book-to-bill was 1.1x. EBIT margin was 16.0% (est. 14.3%), up 240bp QoQ. Adj. PAT of INR2,191m (up 20.3% QoQ/37.2% YoY) was above our estimate of INR1,798m. The adj. PAT excluded a one-time impact of costs related to labor codes amounting to INR254m.

Outlook

We expect EBITDA margins of 15.9%/16.2% for FY26/FY27, translating into a PAT CAGR of ~10% over FY26–28E. Our TP of INR 1,000 is premised on 26x FY28E EPS. We reiterate our BUY rating on the stock.

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Zensar_27012026_Motilal Oswal