Neutral Zensar; target of Rs 730: Motilal Oswal

Motilal Oswal's research report on Zensar

Zensar (ZENT) reported 2QFY26 with flat revenue growth (est. a decline of 0.5% CC). BFS/HLS grew 4.8%/3.9% QoQ CC, while TMT declined 10.2% QoQ CC. Deal TCV: Bookings came in at USD159m (down 8% QoQ/21% YoY), and the book-to-bill was 1.0x. EBIT margin was 13.7% (est. 13.4%), up 20bp QoQ. PAT stood at INR1,821m (flat QoQ/up 17% YoY), above our estimate of INR1,739m. For 1HFY26, revenue/EBIT/PAT grew 8.1%/11.5%/16.1% YoY. For 2HFY26, we expect revenue/EBIT/PAT to grow 9.3%/8.9%/8.6% YoY. Our TP of INR730 is based on 21x Jun’27E EPS. Reiterate Neutral.

Outlook

We keep our estimates largely unchanged. We expect FY26/FY27 EBITDA margin estimates at 15.5%/15.6%, resulting in a PAT CAGR of 10% over FY25–27E. Our TP of INR730 is based on 21x Jun’27E EPS. Reiterate Neutral.