Neutral Zensar; target of Rs 164: Motilal Oswal
Motilal Oswal recommended Neutral rating on Zensar with a target price of Rs 164 in its research report dated July 25, 2020.
July 28, 2020 / 12:13 PM IST
Motilal Oswal 's research report on Zensar
Zensar’s better-than-expected revenue and EBIT margin in 1Q were encouraging. This was led by stronger-than-expected growth in the Hi-Tech vertical and aggressive cost rationalization. The company shared a cautiously optimistic outlook for a stable 2Q and growth in 2HFY21. Commentary around defending margins, healthy deal wins (USD150m), and a robust pipeline are other key positives. We upgrade our EPS estimate for FY21/FY22E by 5%/0% as we adjust our revenue growth assumptions and margin trajectory post the beat during the quarter. Maintain Neutral.
On our revised estimates, the stock is trading at ~10x FY21E EPS, which is toward the higher end of its trading band. We value the stock at ~10x FY22E EPS.
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