Zensar Technologies Shares Complete Fundamental Analysis and Future Outlook
Zensar is valued at $ 500+ Million and is, in turn, a part of $3 billion RPG Group. The company provides Digital Transformation, Cloud and Infrastructure, Data Warehousing, Application development and Guidewire support services to global MNCs.
- The revenue split for the company is 19% from Retail, 52% from Hi-tech Manufacturing, 24% from the Financial Services sector and 5.1% from emerging enterprises.
- The company’s shares have seen a sharp correction from its 52 weeks high of INR 271 and it currently has a market capitalization of INR 21.10 Billion.
- Zensar Technologies is among 5 global tech companies listed on any stock exchange for 55+ years. It has shown a solid track record of corporate governance, profitability and growth over the last few decades.
- The company has a head start in the field of rapidly growing Cloud and Infrastructure business, especially in India.
- It competes with several other major tech companies like TCS and Infosys of India, Capgemini of France and Cognizant of the US. These companies also have established services portfolios, so the growth is obtained only by technical know-how.
- Zensar has been able to deliver solid growth of about 28% YoY in digital revenue, 16.6% YoY in Financial Sector revenue and 32% YoY in cloud business revenue.
I have evaluated the company on 10 fundamental categories and each has been given a rating out of 5 stars. From this, I have arrived at a combined stock rating for the company.
This is the summary of the analysis. You can read the detailed analysis with the excel models on my blog (Check the source link)
Source: Zensar Technologies Shares Complete Fundamental Analysis
Some insights for the coming years from management discussion & analysis (MD&A) and con calls are as follows.
- Zensar Technologies remains focused on growth both organic and inorganic. The management does not have any plans of increasing pay-out ratio despite having a higher cash balance (of about $ 90 million). This will be used for acquisitions.
- The company recently announced $ 170 million of new business orders out of which 45% was from new clients.
- Zensar expects to deliver industry-level growth, once the current restructuring exercise is completed in FY2020.
- There has been a decline in the retail business mostly in the low margin apparel segment. This only formed a small portion of the total revenue so the impact is not very significant.
- The effects of restructuring will be seen in the coming few quarters mostly impacting the margins due to additional expenses. These are one time expenses and the margins are expected to improve from FY 2021.
Overall the company shows promising growth opportunities and therefore it is a good investment in coming years.
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