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ICICI Securities
Zensar Technologies (Buy)
CMP: ₹172.75
Target: ₹210
In 2016, there was a change in management of Zensar Technologies and Sandeep Kishore from HCL Technologies joined as CEO. The new CEO’s focus on building digital capability has led to four acquisition over the past three years. These acquisition coupled with organic RPA tools & platforms have enabled the company to develop a full scale digital practice. We believe this will enable Zensar to participate in full scale digital deals and also help win large deals.
Valuation & outlook: Zensar is well placed in terms of providing IT services in the digital space. Further, focus on large deal wins and mining of top 50 clients bodes well for revenue growth in the long term. In addition, we expect higher organic growth, divestment of non-core business and scale in large deals to boost margins. Consequently, the company is expected to register revenue and PAT CAGR of 11.7 per cent and 15.6 per cent over FY19-21E, respectively. Considering the robust growth, we have a ‘buy’ recommendation on Zensar and assign a P/E multiple of about11x (PEG of 0.6) leading to a target price of ₹210/share.
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