Zensar Technologies (Hold)

Target: ₹792

CMP: ₹831.40

Despite the seasonality impact in BFSI (-1.3 per cent q-o-q) and shutting down impact of few clients in TMT (-3.5 per cent q-o-q), company reported a revenue of $157 million, up by 0.7/8.6 per cent q-o-q/y-o-y in CC terms. Seasonality was offset by growth in Manufacturing (6.5 per cent q-o-q) and healthcare verticals (3.2 per cent q-o-q).

Management is positive to grow in the next quarter backed by the highest order bookings in this quarter ($205.3 million) and their account mining efforts.. Management stated the deal pipeline is healthy and robust. This improvement was broad based across geos and large deals are still in pipeline.

However, management seems to be cautious on the demand environment with the prevailing uncertainty around global macros. Having said that, management also stated discretionary spend intensity to be nearing the pre-covid levels which indicates better spending environment on client’s side.

We expect, company to continue its growth momentum backed by the revival (BFSI) in demand zone. However, with recent run up in the price, we downgrade the stock to Hold rolling into FY27 at target price of ₹792 (22x FY27E EPS) v/s previous TP of ₹760.