Neutral Zensar; target of Rs 164: Motilal Oswal

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.

Outlook

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.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More