Doubling of Q3 profit lifted this IT stock by 6% today

Doubling of Q3 profit lifted this IT stock by 6% today

NEW DELHI: Shares of Zensar Technologies climbed nearly 6 per cent on Friday, after the IT firm said its profit net more than doubled to Rs 98.70 crore in the December quarter, from Rs 38.30 crore in the corresponding period a year ago.

Following the company’s strong results, the stock rose 5.97 per cent to hit a high of Rs 249.25 on BSE.

The company’s deal total contract value (TCV) stood at $200 million in the quarter, marking an increase of 18 per cent compared to the year-ago period. Zensar said it is now a zero-debt company with its highest ever net cash position of $160.2 million.

Motilal Oswal Securities said it would wait for the earnings call on Friday for the outlook, and revisit its estimates accordingly. For now, it has maintained a ‘neutral’ rating on Zensar Technologies, as it values the stock at 12 times FY23 EPS.

The brokerage said the company’s revenue de-growth of 3.7 per cent in constant currency terms was weaker than its expectation of a 0.7 per cent sequential decline. Excluding the impact of decline in Hi-Tech (due to a top account), CC growth would have been 0.9 per cent sequentially, it noted.

In dollar terms, the net profit more than doubled to $13.4 million, while revenue declined 10.9 per cent to $122.8 million in the reported quarter compared with the year-ago period.

“Our PAT has increased 13.3 per cent quarter-on-quarter in dollar terms underscoring our focus on world-class execution and operational excellence,” Zensar Technologies CEO and Managing Director Ajay S Bhutoria said.

“Some of the softness in our US hi-tech and insurance business has been offset by healthy growth in the EU and South Africa as well as our consumer services business.”

Bhutoria noted that digital foundation services have benefited from the company’s consistent investment, and grown 6 per cent on a year-on-year basis.

“Our strategic focus on improving our cash management position has shown significant results in this quarter as we are now in a strong cash position, our highest-ever,” Zensar Technologies Chief Financial Officer Navneet Khandelwal said.

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