Zensar Technologies Q3FY17: Firstcall are overweight for medium term investment

Firstcall India Equity | May 18, 2016, midnight


SYNOPSIS

  • Zensar Technologies Ltd. is a globally renowned software services company that specializes in providing a complete range of Software Services and Solutions.
  • During Q3 FY17, consolidated net profit stood at Rs. 818.00 mn against Rs. 713.50 mn in Q3 FY16, higher by 14.65%.
  • Consolidated revenue for the quarter rose by 4.22% to Rs. 7877.20 mn from Rs. 7558.10 mn, when compared with the prior year period.
  • During the quarter, consolidated EBIDTA is Rs. 1285.70 mn as against Rs. 1195.60 mn in Q3 FY16, grew by 7.54%.
  • During Q3 F Y17, consolidated PBT up by 9.95% to Rs. 1165.40 mn from Rs. 1059.90 mn in Q3 F Y16.
  • EPS of the company stood at Rs. 18.26 a share during the quarter, as against Rs. 16.02 per share over previous year period.
  • Zensar Technologies has recommended payment of Interim Dividend at the rate of Rs. 5/- per Equity Share of Rs.10/- each (50%) of the Company for the FY 2016-17.
  • For the nine months ended December 31, 2016, Net Sales stood at Rs. 2316600 mn from Rs. 22204.30 mn in the corresponding period of last year.
  • Net Profit during 9M FY17 stood at Rs. 2297.80 mn as compared to Rs. 2387.70 mn for the nine months ended 31st December 2015.
  • Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 10% each over 2015 to 2018E, respectively.


OUTLOOK AND CONCLUSION

  • At the current market price of Rs. 906.10, the stock P/E ratio is at 13.09 x FY17E and 11.73 x FY18E respectively.
  • Earning per share (EPS) of the company for the earnings for F Y17E and FY18E is seen at Rs. 69.24 and Rs. 77.23 respectively.
  • Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 10% each over 2015 to 2018E, respectively.
  • On the basis of EV/EBITDA, the stock trades at 7.83 x for FY17E and 6.98 x for FY18E.
  • Price to Book Value of the stock is expected to be at 2.40 x and 2.03 x for FY17E and FY18E respectively.
  • Hence, we say that, we are Overweight in this particular scrip for Medium term investment.

 

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