Alpha | Zensar Applied sciences Ltd.


Zensar Applied sciences Ltd – Enabling Enterprise Velocity

Headquartered in Pune, Zensar Applied sciences Ltd. is a number one know-how options firm. Zensar stands out as a premier know-how providers supplier with a distinguished engineering pedigree. The corporate is targeted on business verticals, comparable to Hello-tech & Manufacturing, Client providers, and Banking, Monetary Providers and Insurance coverage (BFSI). The corporate has majority of its income coming from North America, adopted by UK/Europe and South Africa. With 10,500+ workforce throughout 30+ world location (as on 31 March 2023), it is part of USD 4.4 billion RPG Group. Based by legendary industrialist Dr. R. P. Goenka, RPG Group is a worldwide diversified enterprise group with operations within the areas of Data Know-how, Infrastructure, Tyres, Prescribed drugs, Power and Agribusiness.  

Merchandise and Providers

The corporate affords majorly 5 key providers:

Expertise providers: Expertise design, Expertise engineering, Model, content material and inventive

Advance engineering providers: Cloud technique and working mannequin, Digital engineering, Cloud transformation and operations

Information engineering and analytics: AI and ML providers, Automation, Visualisation and analytics, Information engineering

Utility providers: Utility administration, High quality engineering, Oracle providers, Salesforce providers, SAP providers

Basis providers: Digital operations, Digital workspace, Digital safety, Digital expertise administration, Digital infrastructure

Subsidiaries: As of 31 March 2023, the corporate had 14 Subsidiaries.      

Key Rationale

  • Important wins – Throughout Q3FY24, the corporate supplied service to a connectivity platform supplier, by means of Information Engineering and Analytics to combine IoT of their cloud-based product aligned to IoT Safety Structure. It supplied Built-in Advance Engineering Service options to deal with Safety loopholes for one of many USA’s sensible cities by decreasing price and advancing their current know-how to provide higher enterprise uptime. The corporate additionally delivered finish to finish product engineering on microservice structure for one of many largest fee firms. Moreover, it supplied digital foundational service emigrate and improve International E-business occasion on AWS cloud for one of many largest trip possession firms.
  • Phase efficiency – Banking, Monetary Providers and Insurance coverage (BFSI) grew 12.6% YoY, Manufacturing and Client Providers grew by 5.5%. Whereas the corporate had good quantity progress throughout most of the service traces, income was impacted by seasonal headwinds. Hello-tech section marked a decline in income by 9.6%. A discount in income by 14% was skilled in Healthcare and Life Sciences section as nicely.  Area-wise, Europe and South-Africa generated 12% and 18% enhance in year-over-year income, nevertheless within the US area income fell by 4.2%.
  • Q3FY24 – Firm recorded income of Rs.1,204 crores, a marginal progress of 1% in comparison with the Rs.1,198 crores of Q3FY23, income being taken down by the continued stress in  hi-tech vertical and better furloughs. EBITDA elevated from Rs.135 crores of Q3FY23 to Rs.208 crores in Q3FY24, a progress of 54%. Revenue surged to Rs.162 crores, a rise of 113% in comparison with the identical interval within the earlier yr. The margins have been hindered by weak efficiency of hi-tech section. Order reserving was $167.5 million which was about $37 million greater than the identical quarter final yr.
  • Monetary efficiency – The corporate has generated income and PAT CAGR of 9% and 6% over the interval of 5 years (FY18-23). Common 5-year ROE & ROCE is round 14% and 19% for FY18-23 interval. The corporate has strong capital construction with a debt-to-equity ratio of 0.07.


The IT & BPM sector has develop into one of the vital vital progress catalysts for the Indian financial system, contributing considerably to the nation’s GDP and public welfare. The sector is persistently strengthening its digital capabilities by adopting deep tech applied sciences and specializing in deploying rising know-how options comparable to AI, Cybersecurity, and IoT. India’s IT business is more likely to hit the US$ 350 billion mark by 2026 and contribute 10% in the direction of the nation’s gross home product (GDP), India’s IT and enterprise providers market is projected to achieve US$ 19.93 billion by 2025. The Indian software program product business is predicted to achieve US$ 100 billion by 2025. Information annotation market is predicted to achieve US$ 7 billion by 2030 resulting from accelerated home demand for AI. India can be amongst the quickest rising Fintech markets on the earth. Indian FinTech business’s market measurement is $50 Bn in 2021 and is estimated at ~$150 Bn by 2025.

Progress Drivers

Within the Union Funds 2023-24, the allocation for IT and telecom sector stood at Rs. 97,579.05 crore (US$ 11.8 billion). Cupboard authorized PLI Scheme – 2.0 for IT {Hardware} with a budgetary outlay of Rs. 17,000 crore (US$ 2.06 billion). As much as 100% FDI is allowed in Information processing, Software program growth and Laptop consultancy providers; Software program provide providers; Enterprise and administration consultancy providers, Market analysis providers, technical testing and Evaluation providers, beneath computerized route.

Opponents: Newgen Software program Applied sciences Ltd, Cyient Ltd and so on.

Peer Evaluation

Whereas evaluating with the friends, Zensar is buying and selling at a less expensive worth to earnings ratio with an total wholesome efficiency metrics.


The corporate’s administration has expressed confidence on the expansion of most of its verticals aside from the hi-tech section. The general headwinds impacting the Hello-Tech business and the prolonged furloughs impacted the efficiency of the corporate’s Hello-Tech section as nicely. The corporate has M&A plans laid out, considerably for the Healthcare vertical. It has additionally began to see traction within the gen AI house as nicely.  It has began exploring the med-tech and life science segments which have a broader scope for improvements in comparison with the payer section, which is extremely saturated.


Zensar Applied sciences Ltd is in progress momentum in most of it’s key verticals barring hi-tech section. We anticipate the affect of furloughs to cut back and hi-tech section to get better within the mid to long run. We suggest a BUY score within the inventory with the goal worth (TP) of Rs. 675, 30x FY25E EPS.


  • Foreign exchange Threat – The corporate has vital operations in overseas markets and therefore is uncovered to foreign exchange threat. Any unexpected motion within the foreign exchange market can adversely have an effect on the corporate.
  • Unsure demand surroundings – As a result of recession menace in main economies, the worldwide surroundings and financial situations in key markets may weaken, derailing the corporate progress.

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