Share of Zensar Technologies has delivered 145 per cent return to its shareholders in the last 12 months. The share stood at Rs 175.7 on August 3, 2020. It has zoomed to Rs 430 today, translating into gains of 145 per cent during the period. In comparison, Sensex rose 43 per cent in one year.
An amount of Rs 5 lakh invested in this multibagger stock a year ago would have turned into Rs 12.23 lakh today.
The mid-cap stock has been gaining for the last four trading sessions and rose 3 per cent to hit an all-time high of Rs 430 on BSE today. With a market capitalisation of Rs 9,604.61 crore, the share stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200-day moving averages.
The company reported a net profit of Rs 101 crore for the quarter ended March 2021. Profit in the year-ago period stood at Rs 73.31 crore. Revenue from operations declined 5.4 per cent to Rs 936.80 crore in the March-ended quarter against Rs 991.24 crore a year ago. The EPS has increased to Rs 4.48 in March 2021 from Rs 3.25 in March 2020.
According to MarketsMojo, the company has a strong ability to service debt as it has a low Debt to EBITDA ratio of -0.30 times. Also, the company has high institutional holdings at 38.23%.
The technical trend has improved from Mildly Bullish on August 4, 2021, and the stock is technically in a Bullish range now. Multiple factors for the stock are bullish like MACD, Bollinger Band, KST and OBV.
However, it noted that the stock is trading at a premium compared to its average historical valuations and the valuation seems to be expensive right now.
Zensar’s revenue growth (+5.8% QoQ USD) is back after seven quarters of muted growth, indicating new management’s (CEO Mr. Ajay Bhutoria joined in January 2021) refreshed strategy is headed in the right direction. Strong performance was driven by HiTech (+13.4% QoQ USD) and Banking (+4.8% QoQ) while rest of the verticals showed muted growth,” noted Prabhudas Lilladher.
“New CEO has realigned GTM strategy to tap the strong demand in experience-led services and advanced data & digital engineering services. However, the management mentioned that it would take around 3-7 quarters for the new strategy to fully play out and yield sustainable predictable growth,” the brokerage house added.
“The CEO is focusing sales expansion, partnership, reskilling and M&A which is expected to drive long-term revenues. This strategy is expected to drive long-term sustainable growth. The CEO expects the strategy to fully materialise in the next seven quarters,” said ICICI Direct.
The brokerage house expects EBITDA margins to taper down by 30 bps YoY to 17.8% in the near term and then to expand 120 bps YoY to 19% in FY23E in line with Zensar’s aspiration to reach high teen margins. It has a ‘Buy’ rating on the stock with a target price of Rs 505 per share.