Zensar is a top software and infrastructure services provider from India. Zensar has industry skill that spans Manufacturing, Retail, Insurance, Healthcare, Utilities, and Banking Financial Services. An RPG Group company, Zensar has more than 8000 employees with sales and operations presence across US, UK, South Africa, Europe, Middle East, Singapore and Australia. Zensar provides complete services for enterprise applications, business intelligence and analytics, customer relationship (CRM) and Business Process Management and mission-critical applications. Zensar also provides inventive Infrastructure Management solutions that permit top companies worldwide to optimize, manage, secure and support their critical mission infrastructure. With its multi-shore capabilities, Zensar combines competent consulting, support services and integration with better customer service to assist IT organizations to reduce costs, manage risks better and increase efficiencies. Zensar has developed new tools and methodologies, including the proprietary Solution BluePrint (SBP) which helps its clients with innovative business solutions and a fast ‘ready to-market’ capability.

Zensar has a services portfolio that ranges from the customary to the transformational - across service lines of

• Infrastructure Management Services
• Management Consulting
• Business Application Services
• Enterprise Solutions
• Enterprise Collaboration Services
• Testing and Assurance Services
• BPM

Zensar’s experience across industries which translate into a differentiated value plan and more rapidly time-to-market for clients:

• Retail
• Manufacturing
• Insurance
• Banking
• Healthcare

Their ability in infrastructure-oriented services ranges from remote infrastructure management to end user computing to data center services and security and compliance. Zensar is leading the way in powering next-generation enterprises with its mobility, cloud and social media solutions.

Government initiatives

The government has displayed its support for more participation by introducing the Digital India and Make in India initiative. The country is making intensive strides into creating new technology capabilities with accelerated learning in the emerging areas of cloud, big data analytics and digital enterprise. It is this strategy that is helping the country to raise its practicability worldwide.

Financials

Financially, Zensar Technology has shown positive growth, with operating profit increasing from 350.12 to 394.92 for the year 2016. Zensar’s total income from operations for FY16 increased by 13% and reached to Rs.2964.26 crore from Rs.2627.68 crore, in the previous fiscal year. The earnings before interest, exceptional items & tax also increased to Rs.439.47 crore from Rs. 377.07 crore, representing a growth of 16% year on year.

The profit after tax of Zensar stood at Rs 311.90 crores compared to Rs. 264.63 crores in FY 2015 an increase of 18% from previous year, the increase in profitability is on the back of higher net sales & higher other income.

Fourth quarter net profit was less than the previous quarter, its profit was almost flat Rs 70.19 crore dropping from Rs 71.54 crore seen in the previous quarter. The decrease in net profit was a result of the dip in the maintenance revenue.

Key Developments:

Partnership with Agile Financial Technologies strengthens ZENSAR’s position in BFSI sector

Zensar Technologies Ltd. declared a strategic partnership with Agile Financial Technologies (Agile FT), a world leader in the BFSI software solutions space, to build up its position in the Banking, Financial Services and Insurance (BFSI) sector. This partnership will help Zensar and Agile FT optimize proficiency to meet the speedily growing needs of the sector and continue to remain customer centric by providing them with the industry leading solutions and strong domain skill. Zensar has a direct presence in Dubai and plans to have multiple centers across the region. This partnership is an important step towards re-emphasizing the importance that the Middle East market plays in Zensar’s growth strategy.

Acquisition of Professional Access – a strategic move

ZENSAR acquired two companies:

• India-registered e-commerce company Professional Access Software Development Pvt. Ltd
• Zensar Technologies Inc., the US-based wholly-owned subsidiary of Zensar acquired 100% outstanding equity shares of Professional Access Ltd, a company registered in US.

Both the companies are engaged in the information technology business with a specialization in the e-commerce domain. The acquisition adds significantly to Zensar’s retail capabilities as~90% of PA’s revenues come from Telecom and Retail customers. In major retail logos this acquisition has given Zensar access to CIO level relationships. The acquisition opens up cross-selling opportunities of Zensar's services like

• Oracle EBS
• Fusion Middleware into PA Clients
• PA services to Zensar clients

Conclusion:

Technology is motivating transformation across enterprises with specific initiatives in the area of cloud, social media, analytics and big data analytics. Organizations are looking to find a balance between adopting new technologies like cloud, while running present data centers. Disruptive technologies continue to create unique challenges, with enterprises expecting solution partners to manage end to end transformation for them. This is where Zensar plays a pivotal role and remains relevant.

Over the coming two to three years the management aims 20% revenue share from digital (current revenue share is expected to be 8-9%). It aims to grow up digital and ecommerce business at 20% plus every year for the coming three to four years. Given the strong pipeline and the trends in the market place, it believes that such development is achievable. In the Digital space, Zensar Technologies has brought together product startups in the country, analyzing their innovations, to further help to take the short-listed products global. These startups are in the new age technology areas.

As per our estimate, the stock at CMP of 980 is trading at P/E of 14.31, The Debt Equity ratio is 0.09 with interest coverage ratio of 37.50.The return on equity and return of asset is 22.86 &26.91 respectively.

On the basis of above factors we recommend a buy in Zensar Technologies Ltd for medium term with a target of Rs.1150

Dynamiclevels recommends Zensar as one of our Multibagger Stocks.

To get more Support and Resistance levels of the share please visit Zensar Share Price Forecast