Neutral Zensar; target of Rs 850: Motilal Oswal

Motilal Oswal's research report on Zensar

ZENT reported a decent 3QFY25, with revenue growth of 0.7% QoQ CC (est. flat growth), driven by Manufacturing & Consumer services (up 6.5% QoQ CC) and Healthcare & Lifesciences (up 3.2% QoQ CC). Deal TCV came in at USD205.3m (up 1.7% QoQ/22.6% YoY). EBIT margin expanded 70bp QoQ to 13.8%, above our estimate of 13.2%. PAT of INR1,598m (up 2.6% QoQ/down 1.2% YoY) beat our estimate of INR1,431m, led by higher EBIT & other income. For 9MFY25, revenue grew 6.8%, whereas EBIT/PAT declined 5.8%/3.7% vs. 9MFY24. For 4QFY25, we expect revenue/EBIT/PAT to grow by 11.4%/10.1%/1.3% YoY. Our TP of INR850 is based on 23x FY27E EPS. Reiterate Neutral.

Outlook

We have raised our FY25/FY26/FY27 estimates by ~5%, supported by a decent 3Q print in a seasonally weak quarter and a robust order book. Our TP of INR850 is based on 23x FY27E EPS. Retain Neutral.