Most stocks have generated multibagger gains despite the wake of the Covid-19 epidemic, and IT stocks are blazing strongly and may surge more in 2022, according to experts. On a year-to-date basis, Zensar Technologies has provided a multibagger return of 114.26 percent. For 2022, ICICI Direct, a brokerage firm, has attention to the stock as well. According to the brokerage, the stock may reach a target price of Rs. 565 in a target period of 12 months from the current market levels.
The brokerage’s take on Zensar Technologies Ltd
In its latest research report, ICICI Direct has said that "Zensar has grown organically and inorganically over the years. The company has a net debt-free and healthy double-digit return ratio (with a RoCE of 19%). The company grew at ~5% CAGR in FY16-21, lagging its peers. As it goes through a turnaround, we expect it to grow at 12.6% CAGR in FY21-23E."
According to the brokerage "Margins improved from 14.8% in FY16 to 18.1% in FY21 due to higher offshoring and lower employee costs. The improvement in the margin trajectory is expected to continue. The company has seen healthy client addition in Q2FY22. Client mining and new logo additions are expected to scale up revenues further."
Key triggers for future price performance of Zensar Technologies according to ICICI Direct
- Zensar is addressing key shortages of the past. The new CEO has devised a strategy to focus on the experience side and build capabilities in digital engineering, data, artificial intelligence and machine learning.
- Driving deal momentum, annuity revenues, increasing investment in sales & talent, leadership and tuck-in acquisition to build capability bode well for long-term revenue growth.
- Expect dollar revenue CAGR of 11% over FY21-23E.
Buy Zensar Technologies Says ICICI Direct
The brokerage has claimed that "Zensar's share price has grown by ~2.6x over the past five years (from ~Rs 175 in December 2016 to ~Rs 470 levels in December 2021). We remain positive on the stock and maintain a BUY rating. We value Zensar at Rs 565 i.e. 24x P/E on FY23E EPS."
The stock has been picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.