Zensar Technologies (ZENT IN) - Digital contribution is a key positive - CSEC Research

Digital contribution is a key positive

- In 4QFY17, Zensar consolidated revenue stood at INR 7,492 mn (-5.4% QoQ). In dollar terms, revenue declined by 4.9% QoQ to USD 111.8mn. In CC terms, revenue declined by 5.1% QoQ. Revenue declined on account of delays in ramp-ups of projects and one-time discount to some clients.

- EBITDA margin declined sharply by 460bps QoQ to 9.4% due to the restructuring of MVS business, lower realization, one-time provision of USD 2mn for Indian government business. Reported PAT declined by 73.3% QoQ to INR 21.7mn.

Valuation: We believe that revenue and margin will revive in 1HFY18E, led by Digital, Retail and a recovery in IMS. At CMP, the stock trades at 14.7x/12.0x of FY18/19E EPS. We value the stock at a P/E of 14.0x FY19E EPS with a target price of INR 1,036 and maintain BUY rating on the stock. Risks: Unfavorable cross currency movement.

Shares of ZENSAR TECHNOLOGIES LTD. was last trading in BSE at Rs.877.25 as compared to the previous close of Rs. 886.75. The total number of shares traded during the day was 454 in over 52 trades.

The stock hit an intraday high of Rs. 891.35 and intraday low of 877.25. The net turnover during the day was Rs. 401022.

Source : Equity Bulls

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