100% Payout: Mid-Cap IT Stock Okays Rs 2/Share Interim Dividend For FY24: Buy?

The market capitalization of mid-cap IT company Zensar Technologies exceeds Rs 12,700 Cr. Market observers are paying close attention to the IT stock following the announcement of Q3 results and an interim dividend of Rs 2 per share for FY24. Following the release, the stock was up 3.30% at Rs 561.85 on the BSE today.

Zensar Technologies Dividend

The company has declared an interim dividend of Rs 2.00 (i.e.,100%) per equity share of Rs 2.00 each for the FY 2023-24. Friday, February 2, 2024, has been fixed as the record date for the same. The interim dividend on the equity shares shall be paid/dispatched to the shareholders within 30 days from the date of declaration, according to the company.

Zensar Technologies Results

In comparison to the same quarter in the previous fiscal year, Zensar Technologies reported a 110 per cent year-on-year (YoY) rise in net profit to Rs 161 crore for the third quarter that ended on December 31, 2018. The quarter's total revenue of Rs 1,204 crore represented a YoY increase of 0.54 percent. From 15.65% per cent in the last quarter or Q2FY24 to 14.6 per cent in Q3FY24, the operating margin dropped QoQ.

Manish Tandon, CEO and Managing Director, Zensar, said, "Our focus on client centricity and developing a strong go to market proposition via our Experience to Engineering to Engagement approach is yielding dividends. Our client conversations remain positive, and we expect growth in line with the industry. We continue to double down on service lines that will propel growth and will keep our focus in helping clients through their transformation journey. Talent transformation through new age skill development remains our priority."

Sachin Zute, CFO, Zensar, commenting on the Q3FY24 performance, said, "Our disciplined approach on execution has led to consistent financial performance over last 4 quarters resulting in EPS accretion of 110.7% YoY. Our Profit After Tax (PAT) for the quarter stood at 13.4%, which is an increase of 700 basis points YoY. The company continues to generate healthy cash and have added $68.9M on YoY basis. We continue to focus on our collection rigor with DSO standing at 75 days for the quarter. These improvements underscore our unwavering commitment to enhance critical financial metrics. Additionally, the Board of Directors at its meeting held on January 22, 2024, declared an interim dividend of INR 2.00 per equity share of the company for the financial year 2023-24."

Zensar Technologies Share Price Target

Deven Mehata - Equity Research Analyst at Choice Broking said, ZENSARTECH, currently trading at 553 levels, has showcased a compelling technical pattern on the weekly chart a breakout of a cup and handle formation accompanied by robust volumes. Although the stock experienced profit bookings following its recent highs, a potential re-test of the breakout levels is underway. Notably, ZENSARTECH finds significant support near 515 levels, reinforcing its technical resilience.

Currently positioned above its long-term 200-Day Exponential Moving Average (EMA), the stock remains attractive for investors. For those who entered at lower levels, booking partial profits at the current market price (CMP) while implementing a trailing stop loss near 515 levels is a prudent strategy.

A close observation of the stock's behaviour around the support is crucial, as any closure below 515 levels might signify a trend reversal. On the upside, a modest resistance at 580 levels may temporarily impede further upward movement. However, breaching this resistance, especially on a closing basis, could propel ZENSARTECH to new all-time highs, targeting levels of 650 and beyond.

For fresh long-term investments, purchasing during dips around 535, with a stringent stop loss set at 515 levels, is advisable to align with potential upward trajectories.

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.