D Results in line with our expectations
USD Revenues grew by 3.8% led by good growth seen in the enterprise
business which grew 6.6% QoQ. During the quarter, the IM services grew
by 2.5% QoQ whereas IM Products business grew by 1% QoQ.
Management consciously plans to reduce low margins IM product
business. ZTL’s share is trading at attractive valuations of 7.2x and 6.1x
its expected earnings for FY15E and FY16E. With improvement in the
deal pipeline, we continue to remain positive and have a BUY
recommendation on the stock.
Financial Highlights:
INR Revenues for the quarter remained flat QoQ at Rs.605 crore.
There were project delays due to delays in Visa procurements which
impacted revenues during the quarter. Despite this, USD revenues
grew by 3.8% QoQ which is above our expectations. Company has
signed some big deals in the past few quarters which would drive
the revenues growth going forward.
IM Products business continued to be laggards. Company is in the
process of shutting down some data centres in onsite businesses
and adding up some new technology related services in the IM
business. Company is increasing thrust in the IM business by
providing dual shore services and is consciously reducing the
products business.
EBIDTA margins de-grew 190 bps QoQ at 13.6% mainly due to
project delays. Company expects them to improve going forward
with contribution from the IM business increasing. Company would
be giving wage hikes in Q2FY15 of ~ 7% in offshore and 1.5% on
onsite. This can have an impact on margins of ~ 100 to 150 bps.
For the quarter, made forex gain of Rs.4.7 crore against a loss of Rs.
13.4 crore in the previous quarter.
Adjusted PAT fell by 20% QoQ to Rs.53 crore for the quarter.
Other Highlights
Growth in US was in double digit QoQ during the quarter.
Europe is growing fast and deal pipeline looks good.
Deal pipeline stands at ~ $ 400mn.
Net Cash position stands at Rs.201 crore.
CMP Rs 434
Target Price Rs 492
Sector IT Consulting & Software
Stock Details
BSE Code 504067
NSE Code ZENSARTECH
Bloomberg Code ZENT IN
Market Cap (Rs cr) 1930
Free Float (%) 51.65
52- wk HI/Lo (Rs) 473/181
Avg. volume BSE
(Quarterly) 14306
Face Value (Rs) 10.00
Dividend (FY 14) 100%
Shares o/s (Crs) 4.36
Relative Performance 1Mth 3Mth 1Yr
Zensar 6.2% 15.1% 77.8%
Sensex 4.6% 6.7% 18.8%
Shareholding Pattern 30
th June 14
Promoters Holding 48.18%
Institutional (Incl. FII) 12.66%
Corporate Bodies 2.24%
Public & others 36.92%
Kavita Vempalli (+91 22 3926 8173)
Research Analyst kavita.vempalli@nirmalbang.com
Year Net Sales Growth % EBITDA Margin % PAT Margin% EPS PE EV/EBITDA ROCE %
FY13A 2128.5 18.6% 303.1 14.2% 174.5 8.2% 40.0 9.5 5.7 32.9%
FY14A 2335.0 9.7% 358.1 15.3% 237.5 10.2% 54.7 7.0 4.8 37.7%
FY15E 2546.3 9.0% 409.8 16.1% 260.4 10.2% 60.0 6.4 3.8 35.1%
FY16E 2824.2 10.9% 474.8 16.8% 304.8 10.8% 70.2 5.4 3
USD Revenues grew by 3.8% led by good growth seen in the enterprise
business which grew 6.6% QoQ. During the quarter, the IM services grew
by 2.5% QoQ whereas IM Products business grew by 1% QoQ.
Management consciously plans to reduce low margins IM product
business. ZTL’s share is trading at attractive valuations of 7.2x and 6.1x
its expected earnings for FY15E and FY16E. With improvement in the
deal pipeline, we continue to remain positive and have a BUY
recommendation on the stock.
Financial Highlights:
INR Revenues for the quarter remained flat QoQ at Rs.605 crore.
There were project delays due to delays in Visa procurements which
impacted revenues during the quarter. Despite this, USD revenues
grew by 3.8% QoQ which is above our expectations. Company has
signed some big deals in the past few quarters which would drive
the revenues growth going forward.
IM Products business continued to be laggards. Company is in the
process of shutting down some data centres in onsite businesses
and adding up some new technology related services in the IM
business. Company is increasing thrust in the IM business by
providing dual shore services and is consciously reducing the
products business.
EBIDTA margins de-grew 190 bps QoQ at 13.6% mainly due to
project delays. Company expects them to improve going forward
with contribution from the IM business increasing. Company would
be giving wage hikes in Q2FY15 of ~ 7% in offshore and 1.5% on
onsite. This can have an impact on margins of ~ 100 to 150 bps.
For the quarter, made forex gain of Rs.4.7 crore against a loss of Rs.
13.4 crore in the previous quarter.
Adjusted PAT fell by 20% QoQ to Rs.53 crore for the quarter.
Other Highlights
Growth in US was in double digit QoQ during the quarter.
Europe is growing fast and deal pipeline looks good.
Deal pipeline stands at ~ $ 400mn.
Net Cash position stands at Rs.201 crore.
CMP Rs 434
Target Price Rs 492
Sector IT Consulting & Software
Stock Details
BSE Code 504067
NSE Code ZENSARTECH
Bloomberg Code ZENT IN
Market Cap (Rs cr) 1930
Free Float (%) 51.65
52- wk HI/Lo (Rs) 473/181
Avg. volume BSE
(Quarterly) 14306
Face Value (Rs) 10.00
Dividend (FY 14) 100%
Shares o/s (Crs) 4.36
Relative Performance 1Mth 3Mth 1Yr
Zensar 6.2% 15.1% 77.8%
Sensex 4.6% 6.7% 18.8%
Shareholding Pattern 30
th June 14
Promoters Holding 48.18%
Institutional (Incl. FII) 12.66%
Corporate Bodies 2.24%
Public & others 36.92%
Kavita Vempalli (+91 22 3926 8173)
Research Analyst kavita.vempalli@nirmalbang.com
Year Net Sales Growth % EBITDA Margin % PAT Margin% EPS PE EV/EBITDA ROCE %
FY13A 2128.5 18.6% 303.1 14.2% 174.5 8.2% 40.0 9.5 5.7 32.9%
FY14A 2335.0 9.7% 358.1 15.3% 237.5 10.2% 54.7 7.0 4.8 37.7%
FY15E 2546.3 9.0% 409.8 16.1% 260.4 10.2% 60.0 6.4 3.8 35.1%
FY16E 2824.2 10.9% 474.8 16.8% 304.8 10.8% 70.2 5.4 3
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