Shares of Zensar Technologies climbed 10.72% on Monday to reach a fresh 52-week high of ₹ 375.90 apiece after the company’s results beat analyst expectations. At 01:25 PM, its shares were trading at ₹ 368.55 apiece, up 8.56%. In the past three days, its share price increased by 23.35%, rising from ₹ 304.75 apiece.
Zensar Technologies is a digital solutions and technology company. It is a part of the Mumbai-based RPG group and provides custom applications management services. Moreover, its game testing Centre of Excellence (CoE) helps gaming companies leverage the benefits of speed, and efficiency aligned with its testing and development goals.
Result
The company’s consolidated revenue from operations stood at ₹ 1212.6 crores for the January to March quarter (Q4FY23), indicating an increase of 5.10% as compared to ₹ 1153.8 crores reported in the corresponding quarter last year (Q4FY22). Its net profit dipped 8.87% to ₹ 119.2 crores in Q4FY23, compared to ₹ 130.8 crores in Q4FY22. However, it increased by a whopping 55.82% sequentially, from ₹ 76.5 crores in the October to December quarter (Q3FY23).
For the entire year (FY23), the company reported a revenue of ₹ 4848.2 crores, up 14.24% as compared to 4243.8 crores in FY22. Its net profit decreased by 22.31% to ₹ 327.6 crores in FY23, as compared to ₹ 421.7 crores reported last year (FY22).
Dividend
The company’s board announced a final dividend at ₹ 3.50 per share (175% of the face value of ₹ 2) for the financial year 2022-23, subject to approval by the shareholders. If approved, the dividend will be paid within 30 days after the company’s AGM.
Targets
HDFC Securities has a buy rating on the stock with a target price of ₹ 445 apiece, which translates to an upside of 20.74%. The brokerage said that Zensar reported a strong EBITDA margin expansion of 324bps quarter-on-quarter (QoQ), while its revenue remained flat sequentially. This expansion was on account of lower sub-contracting, higher utilization, better productivity & business mix (lower pass-through) and FX.
Financials
Zensar Technologies is a small-cap company with a market capitalization of ₹ 7689 crores. It has a low return on equity of 11.57%, an ideal debt-to-equity ratio of 0.09 and a dividend yield of 1.47%. Its shares were trading at a price-to-earnings ratio (P/E) of 23.63, which is lower than the industry average of 29.53, indicating that the stock might be undervalued as compared to its peers.
Written by Simran Bafna
