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Zensar Technologies Q3 Review - Topline Growth Recovery Needed For Stock Re-Rating: Motilal Oswal

Zensar Technologies Q3 Review - Topline Growth Recovery Needed For Stock Re-Rating: Motilal Oswal

Attendees working on laptop computers  in New York, U.S. (Photographer Victor J. Blue/Bloomberg)
Attendees working on laptop computers in New York, U.S. (Photographer Victor J. Blue/Bloomberg)

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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.

Click on the attachment to read the full report:

Motilal Oswal Zensar Technologies Q3FY21 Result Update.pdf

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