Multibagger IT Stock Defies Market Bears, Hits New 52-Week High After Q1 PAT Rises 108% YoY; Turns Ex-Dividend

Software and services company, Zensar Technologies' share price witnessed a bull run to hit a new 52-week high on Friday after registering 108% year-on-year growth in Q1FY24 PAT. Also, the midcap stock has turned ex-dividend today. Zensar is already a multibagger and brokerage Axis Securities expects further potential upside.

At the time of writing, Zensar traded at Rs 487.40 apiece, up by Rs 26.20 or 5.68% on BSE. The stock gained by at least 6.97% so far in the day by touching a new 1-year high of Rs 493.35 apiece.

On Friday, the stock is trading as ex-dividend for a final dividend of Rs 3.50 per share for FY23. The dividend, if approved, shall be paid/dispatched to the shareholders within 30 days of its approval by the shareholders, at the AGM.

The year 2023 so far has been fruitful for Zensar investors as the stock's year-to-date rally is to the tune of over 128% on BSE.

In the June 2023 quarter, Zensar registered 107.99% growth in consolidated net profit attributed to owners to Rs 156.2 crore as against Rs 75.1 crore in Q1 of FY23. However, revenue from operations was at Rs 1,227.2 crore in Q1FY24, recording a marginal upside of 1.98% YoY.

Further, in Q1FY24, the company's services revenue stood at $149.2 million, posting a sequential growth of 2.3% and constant currency growth of 2.4%. It also reported net cash of $233.8 million by the end of Q1, rising by 42.% YoY. As of June 30, 2023, the company's headcount stood at 10,540.

Axis Securities in its research note dated July 21, recommended buying Zensar for a target price of Rs 485 per share which is higher from the earlier target price of Rs 385 per share. The brokerage is cautiously positive. In its recommendation rationale, Axis Securities highlighted the following:

- Improved prospects in verticals and increased collaboration with customers support the company's outlook for the coming
quarters.
- The company's TCV was strong in Q1FY24 as there were high contract wins in various verticals of data engineering and related services.
- Management is confident that medium-term demand momentum will increase in light of the deals it has won in recent quarters. It also expects the margin to improve in the future.

Also, the brokerage cited that the company's management has increased revenue growth guidance for FY24 to double-digit in CC terms. Margins are likely to expand in the near term.

"Given the company's strong recovery potential, which is supported by good business deals and improved customer retention, we maintain our BUY recommendation for the stock," the brokerage's note said.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.