Zensar Recognized as an Aspirant in Enterprise QA Services by Everest Group PEAK Matrix.
Zensar is one of the 23 service providers cited in the research and evaluated on the vision and capability and market impact.
Zensar is getting recognized as an IT company for their initiatives in the field of AI , Automation, digital ,etc.
Disc- Invested
Zensar Technologies Ltd
Highlights Of Q2 FY19 and H1 FY19 Results
Financials
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Quarterly Results
- Revenue grew by 7.1 % in rupee terms to 9687 million
- Revenue grew by 2.3% in dollar terms to $138.1 million and 4.1% in constant currency terms. It include Rs.281 million or $4 million of Indigo Slate revenues for the part of the quarter
- Revenue without Indigo Slate for the quarter in Rs.9406 million, reflecting sequential growth of 4%, and in dollar terms, it is $134.1 million, reflecting a decline of 0.7%.
- U.S. dollar realization during the quarter has been Rs.70.13 per dollar as against Rs.67 in the quarter before. A year before in the same quarter, it was Rs.64.3.
- Gross margin for the quarter has declined by 180 basis points due to impact of wage hike and a decline in the utilization in the quarter
- Revenue for core business grew by 2.4 % in dollar terms and 4.4 % in constant currency terms to $ 127.60 million.
- Tax rate for the quarter is at 28.1% as against 27.8% in the previous quarter. Billed DSO stood at 67 days as against 71 days in the previous quarter.
- The total amount of outstanding hedges as of September 30, 2018 is equal to $110.9 million against $116.3 million in the previous quarter.
- Cash and cash equivalent balance was $57.4 million as against $64.4 million at the end of the previous quarter.
- In the quarter company has availed loan of $18.9 million, which has been primarily utilized for the acquisition of Indigo Slate
- PAT grew by 8.6 % for the quarter
- EBITDA grew by 15 % to $ 19.1 million which is 15 % of revenue for the quarter.
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H1 Results
- Revenue grew by 16.5 % in dollar terms and 17.5% in constant currency.
- For core business, the revenue increased by 19% and 21% in dollar terms and constant currency
- Gross margin grew by 17.3 % for H1 in dollar terms.
- EBITDA grew by 27.1 % for H1 in dollar terms.
- PAT grew by 36.7% on a year-on-year basis
- Digital revenue grew by 39.8 % on YOY basis.
Key Highlights
- Digital revenue stood at 44.2 % of overall business grew by 5.2 % sequentially which is driven by CX/UX front-end development capabilities, cloud and infrastructure and mobility business.
- Digital and Application business grew sequentially by 4.1% in constant currency terms on back of core digital at 7% sequentially.
- Cloud infrastructure business grew by 4.2% sequentially on constant currency with cloud; digital led next-gen infrastructure business increased 6.6% sequentially.
- Gross margin and EBITDA were affected by wage hike and impact on utilization change in the quarter.
- Cloud infrastructure business has seen great increase in sales, pipeline and opportunity with an impressive conversion rate resulting in sharp hike in number of RFPs that company is getting invited and responding currently.
- Company had a net new multimillion-dollar infrastructure and cloud win with a Hitech medical devices form. Company also won multiple deals with top-tier clients and added several net new logos during the quarter.
- All regions grew sequentially, led by Europe at 10.9%, Africa by 5.6%, U.S. by 2.8% in constant currency terms. In terms of business sector, Hitech and manufacturing grew sequentially by 8.4%, financial services by 5%, whereas retail had a decline of 8.7% - all in constant currency.
- In term of acquisitions , Foolproof, Keystone and Cynosure are all successfully integrated and continue to do well. The synergistic capabilities of Zensar and company acquisitions are generating good traction within client base , creating new opportunities with selling as one across service line.
- Keystone had a very good quarter with sequential growth of 3.8% and a yearly growth of 28.9%. It also added some exciting new logos during this quarter.
- Indigo slate a company which recently acquired by company has strengthened the core of company digital offering to combined client. Indigo Slate helped add customer experience and digital transformation capabilities, particularly in the U.S. with access to some marquee Fortune 500 client.
- Foolproof is doing well in helping company to win and position differently, particularly in the CDO/CMO space across new and existing clients. In terms of revenue, Foolproof grew 12.7%, sequentially.
- Cynosure had a soft quarter, which was primarily on account of project delays in one of their clients.
- Overall pipeline has seen very good increase, a total of $200 million, sequentially. The total pipeline now stands at $800 plus million TCV. The bookings stood at approximately to $290 million in the first half of the fiscal from $10 plus million deals. The digital team continues to do very well and has had some significant contribution in all the recent wins for company.
- Europe grew by 10.9% over the last quarter on the back of major net new wins and expansion into existing accounts. Africa, as a market, grew by strong 5.6% in constant currency. Both markets saw some headwinds on currency movements that affected the growth in USD terms.
- This quarter show consistent focus as company has increased business from top-tier client considerably, increasing wallet share in those clients. As a result company now have 20 clients in the e $5-plus million category up from 14 a year ago. Company now have 7 clients in the $10 plus million category compared to 5 last quarter.
- Company top clients revenue have increased steadily quarter-on-quarter. In Q2 company revenue from top 5, 10 and 20 clients grew sequentially at 4.1%, 4.5% and 3.2% respectively, while growing at 26.2%, 24.7% and 19.6% on an annualized basis.
- Company is going to launch ROD NEXT as company elevate return on digital to align customer focus for creating g significant business impact in their digital transformation program. RoD NeXT now integrates new and exponential technologies with RoD by bringing together human experience, smart platform and artificial intelligence as key tenets.
- Company business growth has translated into a larger headcount. At the close of Q2 fiscal 2019 company global headcount stood at 9482, a net addition of 360 associates on a quarter-on-quarter basis. Indigo Slate came in with a headcount of 132 associates. On a yearly basis, company have added more than 1050 associates, of which 700 were added in a company core organic business.
- In last 12 month there was total booking of $ 600 plus million. which included multiple $50 plus million wins.
Q&A
- What was the reason for sharp decline in retail organic business ?
- In constant currency terms, there has been an increase 1.7% despite the decline in retail by 8.7%. Retail business ramps down because large part of company retail business is projects business. So typically, they tend to ramp down as they come towards the end of the quarter simply because there is a code freeze so the ramp down, in a way for company it happen a little sooner than expected so large part of the revenue decline is on account of that. However, there have been enough deal closures in that business so company will not carry forward to Q3 but it was largely because of project ramp downs.
- Is there any deal in pipeline in infrastructure management ? How will the transaction happen in the recent deal that company had signed with City of San Diego ?
- Cloud infrastructure has done a phenomenal turnaround. Over the last six-eight months, company have won several deals. In last quarter company have won $45 plus million worth of deals only from cloud infrastructure business. In deal of City of San Diago company is in steady state and doing very well on that. Ruffer is currently in transition. Few days ago company won a deal in UK based wealth management financial services company and company is currently in transition stage right now. Both the deals actually address two different aspects of cloud infrastructure business. San Diego is largely around network and network security and cloud provisioning, whereas the Ruffer is largely around the whole all stacks, the entire stack of compute, storage, network, the whole IT assembly. And Vinci is platform for competitively position ourselves through automation and autonomics, is the backbone for both of these deals and all the deals that company have won recently and the ones company was fighting.
- Is there any currency tailwind seen in new initiatives ?
- Actually, the subcontractor has happened for a couple of reasons. Number one is the large deals that company have won , they came with a bit of a secondment of subcontractor. And over a period of time, it will actually start to go down. When company win $40 million - $50 million individual deals of TCV, a client already has several subcontractors working and in the initial phase, for business continuity reason. Company do take the same subcontractor on board and hence there is an uptick in the subcontractor also, the uptick in the onsite percentage of the business in addition to the acquisition that company have done. As part of the overall strategy itself, company have stated it quite clearly that company entire pivot is around digital and transformation led across the businesses, which, in any case, would mean marginal increase in the onsite business, but now it should start to stabilise. Subcontractor will go down and own onsite strength will go up. But it will start to stabilize in the 65%-66% range.
- Kindly elaborate on the retail business which has come down n to 21% or 22% from 27% so one would have expected it to probably gain share within the overall company’s portfolio with the focus on digital so does company see a reversal of how big retail would be and does company see certain fixes that need to be made, maybe, even in terms of the project closures and getting into more larger-term engagements to deviate from the dependency on these very short-term contracts?
- On the acquisition side that company acquire has no retail and hence the percentage of the business actually does get impacted, and that is factored in retail as 21 % of the business. It is a very core and a very integral part of business. In the last quarter company won $40 million worth of business in retail, particularly in the omni channel and the digital supply chain, which is where company is pivoting its business.
- Most of the traditional capabilities that company had earlier were in the commerce business. Now most large retailers are pretty much done with their commerce implementation. The big implementation of commerce’s is done and now it is more or less about feature enhancement and support and migration and update and all of that. The big investment in the retail sector right now is actually happening in the digital supply chain area. That is where most of these companies are investing where they want to really convert from order management, warehouse management, experience, the whole supply chain plus the experience. They are two different tracks so company pivot over the last couple of months have been to actually start to focus on aligning it where there is client investments happening, which is where company did and so this $40 million worth of win, which has actually happened, is in that area. Company have pretty much bottomed out on the decline of the retail, and company will start to see an uptick in the retail sector. Now as the uptick in the other businesses start to happen, it is unlikely to go back to 27%- 28% of the total business but that is not on account of any non-focus on retail. It is just that the other businesses are doing equally well . But company focus is on retail is pivotal and it is going to come back up.
- Kindly elaborate on the margin front that has taken place in in the IMS segment in particular so both Q-o-Q and Y-o-Y, pretty sharp jumps there, while the maintenance piece of the business is still there and about, and it has not really come down. So where do company see the margins from here ? And should they expand further as the MVS piece comes down ?
- It has two parts core and non-core. MVS is part of company non-core business along with ROW. Company is tracking profitability, all operations and financial parameters for core and noncore both. Core CIS, which is cloud infrastructure business, has two components: One is the traditional CIS business, the L1, L2, and the data center, the core ops, and the second is all cloud orchestration and digital workplace, digital persona, cyber security, all of that and for the last two quarters now company have started showing the trending on both of these businesses. Company pipeline is very healthy right now on the cloud-based infrastructure deals. Deal sizes are the ones where company position itself differently compared to others in the marketplace. These are in the $10 million to $30 million. They are no longer $50 million, $80 million, $100 million. Those deals are far and few. The deals have come down, and company position itself quite uniquely. That is one. Margin profile, hence, on the new business is actually better than the traditional business. Company have expanded its margin on the core infrastructure business. Company have scaled up. One of the reasons why actually the utilization for company in the Q2 went down because company is feeling very good about the quality of pipeline, the deals that company is in the final stages of closing, and hence company have actually hired up for those people and just to be ready to deliver. So margin expansion in the core infrastructure, cloud-oriented business is there and also because it has large number of automation, tool-based service delivery as well.
- In traditional service business company had core services and company use to have an element of products as well. So this time, this quarter, products has seen a slight decline and service business , which is a pure play infra business, has grown almost 20% quarter-on-quarter and products business is a low gross margin business. So given the fact that low gross margin product business declined and the high-margin services business grew substantially, that has also positively impacted the margin
- What was the revenue from Cynosure in this quarter?
- The revenue from Cynosure is around $5.4 million
- What is the overall sales process for companies and how has it changed over last few years for the industry and for company in particular and approximate timelines for particularly larger deals of $50 million , $100 million deal that company is trying to achieve. So how does this ecosystem works ?
- Now company is participating in the deals of $50 million deals for about 18 months. Earlier company was not getting invited but after winning Dan-Diego and there are 3-4 more deals of $50-plus million that company have won. Other than San Diego, company have not publicly announced their names but company is well within the considerations set by the advisors. Now company is participating in chosen market sector, which is Hitech manufacturing, insurance and retail. So that is one track.
- Company have now 20 accounts of $5-million plus per annum and those accounts company believe pretty strongly that there are significant headrooms to grow. Hence one has to proactively grow with them. Keeping digital pivot at the center , the whole Return on Digital earlier and now Return on Digital NeXT, which comes with this AI, Smart Platform and Human Experience and proactively work with the customers to create the deal. Company had a win in Med-devices of about $50 million , It had the complete consideration set of the same deal flow that that company was talking where the client is looking for a high level of automation, they want a nimble player, they want a player, which drives significant cloud adoption for them and significant level of automation. Final point on the deal timeline for a $25 million to $50 million deal, it takes four to six months. In some cases, sooner, some cases, later. But roughly, that is the timeline in which the deal closure happens
- Any large deal company is going to announce in next 3-6 months ?
- Yes had announced a $290 million in north of $10 plus million. The cumulative deals are over $400 million that company have won in last six months. $100 million deals are under $10 million TCV. Large deal pipeline, which as per company definition is $25-plus million, company would be currently holding roughly 14, 15 of them, so it is a healthy pipeline.
- Kindly give long term aspiration on the margin front because this quarter there was dip of about 70 basis point. The aim over last few quarters have been to improve the profitability so kindly give the pulls and pushes this quarter on the operating margin and how company is planning to take it up to 14-15 % range ?
- At EBITDA level company see a drop of 70 basis points. At GM level, it was 180 basis points. So company did a fast recovery on the OPEX side to make sure that the EBITDA, we save some money, but it still dropped by 70 basis points. Company core business, which excludes MVS and excludes ROW company is at 15 % EBITDA. So company have two tracks, which is focusing on to divest out of those two businesses over a period. Company is working to make sure that company stay on course se to clean up and profitably improve that. But for core business the focus is largely that the margin improvement has to come from expansion of gross margin and expansion of gross margin through higher automation, through a higher tool and solutioning base and higher value added, which is digital at the center. So those are three big metrics. The fourth is fresher hiring, company have significantly increased the intake of fresher in company. Company will hire 1000 fresher this fiscal. Company is well on track to do even more than 1000 fresher this fiscal, so that company do right pyramid balancing.
- What were the impact of wage hikes this quarter, any benefit from currency depreciation?
- About 1.7 percentage impact on the gross margins as a result of the wage hike. Currency impact has been roughly about 0.8% positive on the gross margins.
- What is the duration of $50 million plus deals ? Are they three-year or five-year in nature? What is the impact, given that company is seeing a couple of them every year, so they will have a very meaningful impact on company top line growth ? So kindly break it up between the $50 million plus and sub-$50 million deals?
- Company had won 4 deals in of $50 plus million in last 12 months. They are all in multiple phases of implementation. Two are in the steady state, the other two are just getting the transition done, and company should be in steady state in all of them in the next few weeks. The second is on the sub-$50 million which is $25 million to $50 million and $10 million to $25 million, large number of deals are in the $10 million to $25 million deal. There are very few in the $25 million to $50 million. So, once company get above $25 million, then a trending of going above $50 million also and the $10 million to $25 million deals are largely application and digital transformation deals, which have many of our ROD solutions at the core of it as well.
- The average tenure of this deals is between 5-7 years. The two $100 million and the one $80 million deal that company close in that one was five years and two were seven years. Of late company signed another just below $50 million deal, that is a five-year deal. So largely between five years and seven years
- What kind of growth company expect in long run from manufacturing segment ?
- Manufacturing has two components, Hitech and discrete industrial manufacturing. Both pipelines are excellent. The last Med-devices and Hitech deal that company won will help company to ramp up. Company have got cloud infrastructure services, which is doing exceptionally well, b) through both the acquisitions, which is Indigo Slate and Foolproof , company is now having front-end digital capability and that is where the Hitech customers are spending because they also want to deliver their product “as a service”. The moment company do as a service , then experience becomes important for their end client, and as a service, by default, has cloud and infrastructure and provisioning and orchestration and autonomics built in into the platform itself. Company have changed its strategy in Hitech and manufacturing sector.
- How do company expect the second half of FY19 ?
- Retail has bottomed out and the other vertical, which is Hitech, insurance, pipeline is pretty good at the moment. Indigo Slate that company acquire largely has a Hitech portfolio. So, there company have begun the process of selling both Indigo services as well as Zensar services and even the products portfolio of CIS, which traditionally has a pretty good quarter in Q3, simply because everybody tries to consume most of their IT investments before the financial year ends. So company will have a good quarter in Q3.
- How company see earn outs because the net cash flow on Balance sheet has come down substantially ?
- It has gone to working capital and company expect to ease out in the next couple of quarters and company should see some healthy cash generation on that and company will be able to fund their earnouts, which company acquisitions make substantially.
- How much is the earnout payout company should take this year ?
- Upto 31st March there is only some amount of earnout which will come towards at the end of the November. So it is roughly $1.5 million or otherwise there is no other earnout till 31st March,2018.
- In retail impact is it from one single client or it is related to around the client bankruptcy or is it to dragging the professional access account and as company mentioned that retail has bottom out so what company is expecting in next half quarters ?
- There is no bankruptcy. Company have the TRU bankruptcy. So for those company have made provisions for the TRU’s receivables last quarter. On reason for quick uptick in G&A is because e there is no provision for TRU in this quarter. So, no bankruptcy. Company had done a lot of work in E-commerce. A lot of the projects typically get into code freeze, which means that the projects must get completed before September 30, 2018, so that they, in a way move to steady state by October, so company have ramped downs in two of clients, hence therefore the revenues of those came down sharply this quarter. Company has close the largest deal in retail itself towards the end of last quarter. The impact will be seen in mid of the quarter. So company expect that railway should do better as far as Q3 is concerned and company will have the full impact of deal in Q4. Some of the deals that ramped down have moved are basically going to restart development in Q4. So an upstick will be seen there also.
- On the new On site hiring of 400 people , they all are fresher hiring or laterals and is there any kind of re-waging also there onsite?
- Part of the on-site hiring has come from both Indigo Slate and Cynosure because they put together, have around 200-odd people onsite. So, a large part of that has come from there only. But outside of that, even in some of the large deals. Company had to rebatch some employees, and some of them are still in transition phases. So company had still not seen the full impact of revenue coming from those clients. So, it is partially on account of those two reasons.
1 Like
HDFC Securities Report on Q1 FY20 Results
CEO Sandeep Kishore said the company was moving from being a ‘living digital’ to a ‘living AI’ organisation.“You have to disrupt yourself — if you aren’t focused on AI, then you’re already irrelevant. The only way to create a business impact today is to have AI at the heart of it. We’ve launched a set of internal platforms and will be taking this to customers next,” he said.
The push for AI comes from a belief that this technology is at a point where digital technologies were a few years ago. No one expected digital to disrupt business as fast as it did, and Kishore said this is what they expect will happen with AI.
“We’re investing in platforms where the decisions are being taken by the AI engine, so people can focus on the work they’re supposed to be doing. Most customers are moving from products to wanting things ‘as a service’,” he said.
The company’s R&D facility, rebranded as Zensar AIRLabs, is now completely focused on AI and has filed for 100 patents in the past two years.
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its great to see that CEO talking about disruption and AI. It is one of the few IT companies which has a lot of focus towards the future . For example their digital revenues now contribute to 48.5% of their revenues. The same percentage was around 30-32 % few years back. Now apart from digital they are talking about AI , which is one step forward.
Disc- Invested
2 Likes
Continuous acquisitions, declining cash flows, rising debtors, increasing leverage– all of this coming together is a classic red flag! When digital was the in-thing, management spoke of digital. Now digital is passé, AI is the in-thing. Just using the word ‘ disruption’ makes me sound intelligent.
Please check how much money has been pumped into acquisitions last few years and what is the incremental growth it has given. If you remove Other Income and deflate the results with acquisition effects, true organic growth rate will come out.
Not that I have anything against the company, I held this stock at one point of time, booked my profits and exited. Wasn’t comfortable with the business model to hold it for the long term. Be careful, all the best.
8 Likes
According to my view, There is nothing wrong with the company, In 2016 company recruited new ceo (Sandeep Kishore) after that everything is going according to his plan. First he made the company internal doings into digital later he offered for the customers, we can see the proof by just going into the google app store and type zensar we can find many digital apps which company uses internally And next point is We can also check the revenue percentage of digital is almost 50% of total revenue which is achived through aquisitions and internal changes. infact due to their focus on digital their traditional revenue is all time low. Now they are focusing on AI, we have to wait and see how they can implement this strategy.
Disc- Invested since 2016 ( Views may be biased)
3 Likes
The script appeared in 52 week low of Rs 133, PAT has declined in last quarter (93 to 80 (Sep) and 55 to 40 (Dec) Cr) but trades now at P/E of 10.7 (considered cheap), any expert views?
I am in the process of studying the company. From sep 2020 quarter results there is one exceptional item and deducted ₹8873 lacks and notes section describes the activity as following.
- During the quarter ended 30th September 2020, in line with its strategy to focus on core businesses only, the Company had advanced its process to identify potential buyers for
Third Party Maintenance (‘TPM’) business housed in its subsidiaries, PSI Holding Group Inc, Zensar Technologies IM Inc and Zensar Technologies IM B.V. (collectively referred to
as “PSI Group” or “disposal group”).
Subsequently, on 19th October 2020, the Company signed an agreement subject to approval of shareholders and other approvals for sale of PSI Group for a consideration of USD
10 million receivable upfront (subject to working capital adjustment) and USD 5 million performance based deferred earnouts. Accordingly, for September 2020 results, carrying
amount of assets amounting to Rs. 18,974 lakhs and liabilities amounting to Rs. 6,108 lakhs in respect of the disposal group have been reclassified as “Held For Sale”. On
reclassification, the disposal group has been measured at the lower of carrying amount and fair value less transaction cost associated to sell and consequently, an “Adjustment in
respect of excess of carrying amount including goodwill over recoverable amount on classification as Held for Sale” of Rs. 8,873 lakhs has been recognized in the Consolidated
Profit and Loss for the quarter and half year ended 30th September 2020 and disclosed as exceptional item. On the eventual disposal of Asset Held for Sale, the Zensar Group
will reclassify balance in Foreign currency translation reserve as on that date to Consolidated Statement of Profit and Loss. The disposal group does not constitute a separate
major component of the Zensar Group and therefore has not been classified as discontinued operations in the Consolidated Statement of Profit and Loss.
Anyone have any further updates on this ?
Zensar has declared a good set of results. The company’s expertise lies in financial services, telecom, logistics, manufacturing, retail, and utilities. Zensar has recently acquired US-based digital engineering firm M3bi. How does the future look like?
1 Like
Initiating coverage report by Dalal & Broacha
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I have excess cash and looking to deploy cash in cases where potential downside is extremely low. There is a chance to get 2X return in 3 years. However even if thesis goes complete southwards, stock should not give much downside.
I have been researching Zensar from some time now. Hence my decision may be biased. Please test my logic before you decide to jump as well. Currently there are also quite a few areas where I lack clarity. Topmost of that is SFA (Strategic Focus Area) wise revenue split and growth potential of each of these SFAs. I have also not done any deep forensic account audit. This might bring surprises in future. However on first look, I believe books to be decently clean.
Currently this stock can be purchased at a market cap of approx 6K Cr. Last 3 years FCF is 568 Cr. It has Rs. 520 Cr. cash net of debt (855 Cr. Cash - 355 Cr Debt). Current market cap is pricing this stock at 3% FCF growth for next 10 years. This is definitely very conservative, considering last few quarters revenue growth.
Biggest risk right now is employee retention and cost associated with it. Almost every IT company is struggling with it. Zensar more so because it might not have as robust training/skill development programs as giant like TCS, Infosys etc. This might have a downward impact on margin. Margin has already dropped from 18% in FY21 to 15% in FY 22. Assuming further drop of margin to 12% in FY23 onwards, FCF will roughly drop to 370 Cr.
Even with such drop in OPM, 6K Cr. market cap is pricing the company at 9% YoY growth in FCF. This is again on conservative side only considering company has grown revenue at 12% in last FY. All indication points that new SFA based approach is giving good revenue growth.
Now lets consider an optimistic scenario. In all likelihood, manpower challenges should be over in next 2-3 quarters. 15% average margin can be achieved with little effort and proper cost management. Revenue growth of 15% is also achievable. Mr. Ajay S Bhutoria seems like a competent and honest leader with clear vision. He has a history of sticking with organization for long haul. So 15% growth with 15% margin is quite probable and can play out in next 2-3 years.
13% growth in last 3 years average FCF gives 2X potential return.
So I decided to make an investment in this company in accordance with my philosophy of minimal downside with a decent probability of 2X return. There are definitely better return options in market and even in IT industry but I am not sure about downside. Hence this choice.
Disclaimer : As mentioned above I might be completely biased. Please do your own research. Hope my perspective will help you in making better decision.
5 Likes
Bad performance continues…
Looks like the new CEO and business vertical heads are not able to turn around the company. The only comfort is low valuations.
Disc: Not invested.
My reply to one of the member who asked for my opinion. However I have been wrong in past and may be so in this case also. So please do your own research. Pls!!
Recent drop definitely makes valuation attractive. Key issue is margin pressure due to increase in employee cost.
Employee attrition and their cost increase due to retention bonus, salary hike etc. is a key issue for all Indian IT companies currently. Zensar seems to be struggling with this. Assuming that their revenue reporting is clean, there is a consistent growth in revenue. Mr. Bhutoria policy of focusing on 5 growth verticals seems to be working. Hence once this margin pressure is over, company must bounce back handsomely. However if you are yet to invest, then you can wait for 1/2 quarters more. Just my opinion.
7 Likes
Dear Mr Santosh Sinha ,
I believe you have done the valuation using the excel version available in the screener. Normally, the excel templates points us to key in some of the inputs from last 5 year annual reports. Hope you have done the same. To save time, would it be possible to share the excel file here. Thanks.
BTW, business line today recommended this stock today . They captured your thesis as well and projected as value buy. I have the print edition and could not share. Please do read and revert.
Regards
M Sivakumar
Favourable risk and reward ratio Why buy Zensar Technologies stock now - The Hindu BusinessLine
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Totally agree to you … this is an opportunity … As far as the business is growing and FCF is intact it worth a look plus margin issue is not only with Zensar it is across … The salaries have corrected big time in IT.
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I have done the analysis based on Excel template by Vishal Khandelwal Ji of Safal Niveshak. The same can be found in this article.
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It is a premium content so could not read all. Its always nice to receive validation by others. However it is a double-edged sword. So please DYOR.