Zensar Technologies Ltd's Q3FY19 consolidated net profit declines 40.8% qoq to Rs55cr : Misses Estimates

The company’s consolidated revenue stood at Rs1,036cr, up 6.9% qoq and 30.5 yoy.

Jan 21, 2019 07:01 IST India Infoline Research Team

Zensar Technologies Ltd Q3FY19

Consolidated Results Q3FY19: (Rs in cr)

Q3FY19 QoQ (%)
Revenue 1,035.55 6.9
EBIT 86.69 [13.7]
EBIT Margin (%) 8.4 [200]
Net Profit (adjusted) 55.28 [40.8]
***EBIT margin change is bps
Zensar's reported numbers for Q3FY19 disappointed on EBIT and PAT fronts. Revenue in Rupee terms grew by 6.9% qoq to Rs1,036cr, which is above median consensus estimate of Rs1,019cr. US$ revenue grew by 4% qoq to USD143.7mn. EBIT came in at Rs86.7cr, down 13.7% qoq against median consensus estimate of Rs107cr. EBIT margin contracted by 200bp qoq to 8.4%. Reported PAT declined by 40.8% qoq to Rs55cr against median consensus estimate of Rs83cr.
  • Revenue in constant currency (cc) terms grew by 4.5% qoq.
  • Amongst verticals, Financial services (+9.6% qoq cc) led growth with banking growing at 22.3% qoq cc and insurance up 6.5% qoq cc. Its largest vertical, Hitech and Manufacturing grew by 1.1% qoq cc on the back of new logo additions with Hitech up 3.8% qoq cc, while Manufacturing was down 5.7% qoq cc.
  • Emerging grew by 48.8% qoq cc, while Retail and Consumer Services grew by 1.1% qoq cc led by both Omni-Channel and growth in Retail ISV business.
  • In terms of geography, US posted robust growth (+6.6% qoq cc), Europe grew by 5.7% qoq cc, Africa declined by 3.6% on qoq cc basis and RoW sharply declined by 39.6% qoq cc.
  • Digital and Application Services (DAS) grew by 2.1% qoq cc. Within DAS, Digital Services grew by 5.9% qoq cc, while Core Application Services declined by 1% qoq cc.
  • Cloud and Infrastructure Services (CIS) grew by 17.4% qoq cc. Within CIS - Cloud, Digital Led next gen CIS grew by 10.1% qoq cc, Core Infrastructure Services grew by 55.6% qoq cc, and Third Party Maintenance declined by 11.5% qoq cc.
  • Total digital services grew by 6.3% qoq cc. Digital now accounts for 44.9% of the overall revenues.
  • TCV booking crossed USD200mn mark for the first time.
  • EBIT margin miss was on account of several deals won in the past that are under transition, furloughs and lower employee utilisation on employee ramp-up.
  • PAT was also impacted on account of lower other income. This was on account of forex losses during the quarter of Rs17cr vs. forex gains of Rs35cr in Q2FY19.
  • Top 5 /10 / 20 clients grew by 6.5% qoq, 10.2% qoq and 8.7% qoq respectively.
  • The company continues to focus on large deals; 55% deals are with TCV over USD10mn across Zensar.

Technical View:

Zensar Technologies Ltd is currently trading at Rs. 231, down by 2.95 points or 1.26% from its previous closing of Rs. 233.95 on the BSE.
The scrip opened at Rs. 238.85 and has touched a high and low of Rs. 239.15 and Rs. 230.05 respectively. So far 50,912 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.

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