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HDFC Securities
Zensar Tech (Buy)
CMP: ₹731.65
Target: ₹882
Q3FY15 was a good quarter for Zensar Technologies, much better than the earlier quarters, especially with the turnaround in the IM (information management) business, continuing growth in professional access and healthy deal pipeline across all business segments. We expect this good performance to continue over the next few quarters. The management has indicated good traction in order booking and healthy deal pipeline. In Q2FY15, the pipeline stood at ₹2,460 crore of which 36-37 per cent was for IMS. We expect further deal wins going forward, thus improving the revenue visibility and boosting revenue growth.
The consolidated service offerings along with Akibia are getting acceptance from the company’s clients. The company had been de-focusing on the products business and has stated that the scale-down is over, and going forward it expects the product business to stabilise. While the enterprise business is witnessing stability, the IM business is recovering from an underperformance over the last two years, which is encouraging. The company is witnessing healthy traction in order bookings in enterprise transformation business. There is increased activity from clients to upgrade from Oracle version 11 to version 12, which has led to robust order bookings in this business. ZTL is also betting big on digital space and expects 20 per cent revenue share over the next two to three years.
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