Zensar Tech dips 9% after over 10% equity change hands via block deals

Shares of Zensar Technologies dipped 9 per cent to Rs 445.30 on the BSE in Thursday’s intra-day trade after more than 10 per cent of the total equity of IT consulting & software company changed hands via blocks deals.

At 09:15 am; around 26.82 million shares representing 11.87 per cent of total equity of Zensar Technologies changed hands on the BSE, the exchange data showed. Till 01:38 pm; a combined 47.16 million shares or 20.87 per cent of equity of the company changed on the BSE and NSE, data showed. The names of the buyers and sellers are not ascertained immediately.

Currently, the stock was trading 8 per cent lower at Rs 453, as compared to 0.49 per cent decline in the S&P BSE Sensex.
As on September 30, 2021, among public shareholders, Marina Holdco (FPI) Ltd held 25.75 million or 11.40 per cent stake in Zensar Technologies, the shareholding pattern data shows. The promoters held 49.12 per cent holding in the company, data shows.

With today’s fall, the stock has corrected 24 per cent from its 52-week high of Rs 587 touched on September 16, 2021.
In July-September quarter (Q2FY22), Zensar Technologies, a leading experience engineering and technology solutions company, reported a strong 12.3 per cent quarter-on-quarter (QoQ) growth in $ revenue of $141.9 million in a constant currency (CC) and organic CC growth of 6.4 per cent QoQ. Earnings before interest, tax (Ebit) margin declined by 300 basis point QoQ to 10.9 per cent due to a salary hike and other supply-related factors. Deal TCV witnessed a strong recovery to USD 188.5 million (v/s USD97 million in Q1FY22), implying a book-to-bill ratio of 1.3x.

Motilal Oswal Financial Services expects the revenue growth momentum to continue in 2HFY22 and FY23. The new CEO led leadership team is in place and its growth strategy has delivered results. “We expect sustained traction, despite margin falling to midteen levels. The management expects margin to revert to high teens in the medium term. With a likely return to high-teens organic growth in FY23E (we estimate 19 per cent YoY) on a good FY22 exit and a recovery in key accounts, we see potential for a significant stock re-rating as valuations catch up with its peer group,” the brokerage firm said in result update.