100% Dividend: Top Performing IT Stock Of Jan 2025, Zensar Tech Up 16%, Hits New High In 1-Day; Buy After Q3?

Zensar Technologies, a midcap tech player, has emerged among the best performing IT stocks of January 2025. Right from its weekly, monthly, half-year and YoY basis, Zensar stock has given double-digit returns. Continuing on its trend, Zensar stock has skyrocketed by nearly 16% and touched its new 52-week high of Rs 869.70 apiece on NSE during Thursday, January 23rd trading session. The latest uptrend was fuelled by decent results in Q3FY25, and expectations of better growth in the upcoming quarter. Brokerage has given BUY or Hold recommendation. Going ahead, Zensar will also reward investors with a 100% dividend.

On January 23rd, Zensar has emerged among top 5 best performing stocks on BSE and NSE.

Zensar Technologies Share Price:

At the time of writing, Zensar Tech's share price surged by 12.4% to trade at Rs 843 apiece on BSE with a market cap of Rs 19,124.68 crore. The company touched a new 52-week high of Rs 869.70 apiece in the early trade, registering a nearly 16% overall surge on Thursday.

Zensar's weekly performance is up by 11%, while its month-on-month performance has surged by 12.5%. In six months, the stock is up by 10%. While year-to-date, the stock has zoomed by 11.6%. In a year, the upside is whopping more than 53%.

Data from NSE showed that in 30-day performance, Zensar's peers like Coforge, Persistent, and Mphasis are down by 12.5%, 11.2% and 5.7% respectively. Heavyweights like TCS, Infosys, HCL Tech, and Tech Mahindra are also in red between flat to 4% decline. Among the top gainers in a 30-day span is LTTS stock which soared by 13.4%, LTIMindtree up 2% and Wipro which is marginally up in the period. This makes Zensar among the top performers after LTTS.

Zensar Technologies Q3 Results:

During Q3 of FY25, Zensar posted revenue of $157.0M, a quarterly YoY growth of 8.6% in reported currency and 7.5% in constant currency. This translates to a sequential QoQ growth of 0.5% in reported currency and 0.7% in constant currency. Further, its Gross Margin stood at 30.1% of revenues, representing a sequential QoQ improvement of 200 basis points.

In rupee terms, Zensar posted 1.3% QoQ or 10.1% YoY growth in revenue to Rs 1,325.6 crore, while PAT surged by 2.6% QoQ but fell by 1.2% YoY to Rs 159.8 crore.

Pulkit Bhandari, CFO, Zensar, commenting on the Q3FY25 performance said, "We have clocked an order book of $205.3M this quarter showcasing our strong sales efforts. Our EBITDA improved by 20 bps to 15.6% despite seasonal furlough. Further, our DSO improved by 3 days to 68 days on account of healthy collections."

Zensar Technologies Dividend:

The IT player has declared an interim dividend of INR 2.00 (i.e., 100%) per Equity Share of INR 2.00 each of the Company.

The interim dividend shall be paid to the Members on or before February 10, 2025, whose names appear in the Register of Members of the Company or the records of the Depositories as beneficial owners of the shares as of Tuesday, January 28, 2025, which is the Record Date fixed for the purpose.

BUY Zensar Technologies Stock?

In its report, Nuvama said, "Zensar delivered a decent Q3 on an organic basis even as furlough hurt growth in key verticals. It is now trading at 24x FY26E PE-significantly higher than its historical average (13x, 10 years)-rendering the risk-reward unfavourable. We believe Zensar needs to show superior consistent revenue and earnings growth to justify its current valuation; Retain 'HOLD/SU' on a relatively lower earnings growth profile." The 12-month target price is at Rs 720.

Furthermore, Antique Stock Broking highlighted that Management anticipates the TMT vertical growing in 4Q, though its revenue share is expected to decrease as reliance on top customers continues to decline. While the HLS vertical is seeing muted demand due to uncertainties in the US. Management commentary also suggests the macro environment continues to remain uncertain, while there are early signs of improvement in discretionary spends. They are optimistic about AI being a strong demand driver for discretionary spending in the future, however, it is still in early stages.

Antique's note further said, Deal win TCV was strong and broad-based and stood at USD 205 mn vs. an average of USD 170 mn for the last eight quarters. Management mentioned that they remain focused on winning large deals to create revenue growth visibility for the near to medium term. They are cautiously optimistic about FY26 and aspire to achieve double-digit growth led by a strong deal momentum and strong execution.

On the valuation, Antique said, "EBIT margin improved by 70 bps QoQ to 13.8%, better than our expectation of 13.2%, led by higher leave utilization, operational efficiencies, and foreign exchange fluctuation. Post the results, we maintain BUY rating on the stock and increase the TP to Rs 850 (from INR 820), as we marginally increase our EPS estimates."

About Zensar Technologies:

RPG Enterprises, established in 1979, is one of India's fastest-growing business groups, with a turnover of US$ 4.7 billion. The group has diverse business interests in the areas of Infrastructure, Tyres, Pharma, IT and Specialty as well as in emerging innovation-led technology businesses.