Small Cap IT Sector Stock Gets "Buy" Call Post Q3 Results, Will Soon Trade Ex-Dividend

IDBI Capital has assigned a "Buy" on Zensar Technologies Ltd., a small-cap IT Sector stock having a market capitalisation of Rs 5,161.32 crore. The brokerage has assigned Rs 280 apiece target price for the stock of the company. It claims a potential upside of up to 23% from its current level if the stock is purchased at the current market price. The company has recently declared its Q3 results. It also declared an interim dividend for the year ending March 2023. The Board of Directors of Zensar Technologies Ltd announced Rs 1.50 per equity share interim Dividend.

Zensar Technologies' Stock Outlook & Performance

The last traded share price of Zensar Technologies is Rs 228 apiece on NSE. The stock gained 2.98% as compared to the previous close. The stock touched its 52 week high on 24 January 2022 at Rs 443.70 apiece and 52 week low on 23 December 2022 at Rs 201.50 apiece, respectively.  The stock gained 5.17% in the past 1 week and 12.37% in the past 1 month, respectively. It has given 6.69% in the past 3 months. The stock has fallen 45.15% in the past 1 year. The stock has given 30.73% positive return in the last 3 years and 20.97% in the last 5 years, respectively.

Zensar Technologies announced Interim Dividend

The Board of Directors of Zensar Technologies Ltd. in its regulatory filing to BSE on January 23, 2023, has said, "Dividend of INR 1.50 per equity share of INR 2 each (i.e., 75%) for the FY 2022-23. The record date has been fixed as Friday, February 3, 2023 for determining the shareholders eligible for the above interim dividend. The interim dividend on the equity shares shall be paid/dispatched to the shareholders within 30 days from the date of declaration."

Macro challenges in near term, long term growth intact, Buy

According to the brokerage, Zensar reported declining revenue in Q3FY23 mainly led by furloughs and lower pass through revenues. However, it has registered improvement in EBITDA margins of ~273 bps to 11.3%. Further, the company aims to improve margins to mid-teens (~15-16%) by Q2FY24E. Further, the new CEO has been instrumental in turning around a smaller size IT company CSS corp . Under his leadership CSS corp registered 5% sequential quarterly growth in revenues and 18% EBIDTA with 60%+ Cash conversion. "We expect the new CEO to make a similar turnaround in Zensar. The new CEO's current focus is on improving margins followed by revenue growth. Hence, we have conservatively built in revenue & PAT CAGR of 9% & 37% over FY23E-FY25E respectively. We maintain our Buy rating on the stock with a target price of Rs 280 (12x PE on FY25E EPS)," the brokerage has said.

Disclaimer

The stock has been picked from the brokerage report of IDBI Capital. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.