Zensar Tech Q3 Results Review - Macro Challenges In Near Term, Long Term Growth Intact: IDBI Capital
Zensar Technologies reported declining revenue in Q3 FY23 mainly led by furloughs and lower pass through revenues.
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IDBI Capital Report
Zensar Technologies Ltd. reported declining revenue in Q3 FY23 mainly led by furloughs and lower pass through revenues. However, it has registered improvement in Ebitda margins of ~273 basis points to 11.3%.
Further, the company aims to improve margins to mid-teens (~15-16%) by Q2 FY24E. Further, the new Chief Executive Officer 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% Ebitda with 60% plus 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 and profit after tax compound annual growth rate of 9% and 37% over FY23E-FY25E respectively.
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