Target Price: ₹792
Current Market Price: ₹831.40
Despite the seasonal impact on the BFSI sector (-1.3% q-o-q) and the closure of some clients in the TMT sector (-3.5% q-o-q), Zensar Technologies reported a revenue of $157 million, which represents a growth of 0.7% q-o-q and 8.6% y-o-y in constant currency terms. The seasonal decline was offset by growth in the Manufacturing (6.5% q-o-q) and healthcare (3.2% q-o-q) verticals.
The management is optimistic about growth in the next quarter, supported by the highest order bookings in the current quarter ($205.3 million) and their efforts in account mining. The management highlighted a healthy and robust deal pipeline, with large deals still in the pipeline across various geographies.
However, the management expressed caution regarding the demand environment due to the prevailing global macroeconomic uncertainty. On the other hand, discretionary spending intensity is approaching pre-COVID levels, indicating a better spending environment on the client’s side.
We anticipate that Zensar Technologies will sustain its growth momentum, particularly driven by the recovery in the BFSI demand. However, considering the recent price appreciation, we are downgrading the stock to a Hold rating for the fiscal year 2027, with a target price of ₹792 (22x FY27E EPS) as compared to the previous target price of ₹760.
