Compound share

ICICI Securities sees more potential in this IT stock

Zensar Technologies (Zensar) provides application and IMS services to high tech, manufacturing, retail and BFSI. The company has grown both organically and inorganically over the years with a healthy double-digit net debt-free return ratio (with a RoCE of 19%), brokerage ICICI Securities noted.

The Zensar share price has risen approximately 2.6 times over the past five years (from approximately ??175 in December 2016 to ?? ??470 levels in December 2021). The brokerage firm remains positive on multibagger stock, up around 115% this year, and has maintained the Buy rating. He values ​​Zensar at ??565 per share (target price) with a target period of approximately twelve months.

“Zensar is tackling the main shortages of the past. The new CEO has devised a strategy to focus on experience and build capacity in digital engineering, data, artificial intelligence and machine learning, ”ICICI Securities said in the note.

Boosting transactions, income from annuities, increased investment in sales and talent, leadership and integrated acquisition to build capacity bodes well for long-term revenue growth. Expect a dollar revenue CAGR (compound annual growth rate) of 11% in fiscal year 21-23E, which could serve as key triggers for future price performance, according to the brokerage.

Zensar Tech saw an addition of healthy customers at T2FY22. Customer exploration and the addition of new logos are expected to further increase revenue. Margins improved from 14.8% in FY16 to 18.1% in FY21 due to increased outsourcing and lower labor costs. The improvement in the trajectory of margins should also continue.

Besides Zensar, in its IT coverage, ICICI Securities said it also likes Infosys as a key beneficiary of improving digital demand, industry-leading revenue growth and sound allocation of capital. inspire us to be positive. Its buy tag on Infosys shares comes with a target price of ??2,060 each.

The opinions and recommendations expressed above are those of individual analysts or brokerage firms, not Mint.

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