Zensar Technologies Q3 Review - Topline Growth Recovery Needed For Stock Re-Rating: Motilal Oswal
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Motilal Oswal Report
Zensar Technologies Ltd.’s Q3 FY21 revenue performance (decline of 3.7% QoQ constant currency) – impacted by restructuring at its top client – was below our already muted expectation.
With the company guiding for a weak Q4 on continued drag from the top client, we expect double-digit decline (down 12.1% YoY) for FY21E.
On the other hand, the Q3 Ebit margin (15.9%) was ahead of our expectation as it continued to benefit from the offshore revenue shift (up 300 basis point QoQ; up 910 basis point YoY).
We expect the company to reinvest some of the gains from aggressive cost rationalization into growth and expect an Ebit margin of 14.8% in FY22E.
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