Zensar Technology is a leading technology solutions company with a robust foundation in engineering excellence.
Zensar Technology business model depicts their value creation process through our growth enablers by outlining our key inputs, their activities, and the resulting outputs. they offer comprehensive solutions to their clients through their experience-led everything philosophy, supported by their full lifecycle capability – from experience to engineering to engagement. their business strategy supports their objective to provide innovative industry-focused solutions and partner with their
customers for success.
Global Information Technology industry
The technology market is expected to witness rapid growth, fuelled by enterprise investments in software and IT services in the coming years. Global IT spending is anticipated to reach $5 trillion in CY2024, marking a 6.8% increase from CY2023.6 IT services are projected to experience significant growth, becoming the largest segment of IT spending for the first time, with an expected 8.7% increase to $1.5 trillion in CY2024.7 This growth can be attributed to enterprises investing in projects aimed at enhancing organisational efficiency and optimisation. The global AI market has the potential to reach $320-380 billion by 2027, with GenAI expected to contribute approximately one-third of this value.8 Enterprises focusing on investing in software and IT services, including artificial intelligence, cloud computing and cybersecurity technologies, will propel the growth of the tech market.
A substantial increase in enterprises investing in AI/ML capabilities is expected in the coming years. A significant focus on data & analytics across various industries such as technology, banking and healthcare is gaining momentum. The HR/CRM solutions are increasing in demand, especially in Europe within the technology, banking and healthcare sectors. The upcoming years are expected to be transformative for generative AI, with technology companies experimenting to discover applications that enhance efficiency and productivity.
In CY2023, 70% of enterprises worldwide allocated 20% or more of their technology budget to digital initiatives, marking a significant increase from 57% in CY2022. This surge was particularly notable in the energy and utilities, high-tech and retail sectors. Along with that outsourcing has expanded, with a greater portion of budgets directed towards digital initiatives and a preference for longer-term contracts.
India’s Information Technology industry
India’s technology industry has been demonstrating resilience amidst uncertainties, underscoring its adaptability and inherent strength. The increase in the number of large tech deals, stable net profit margins, lower attrition rates, higher utilisation and enhanced market trust, have enabled the industry to grow steadily.
India has emerged as one of the world’s fastest-growing Fintech markets, with the Fintech market opportunity expected to reach USD 2.1 trillion by 2030.14 A substantial AI talent pool and generous AI investments will propel the AI market in India to grow at a compound annual growth rate (CAGR) of approximately 25-35% until 2027.15
India remains a preferred destination for tech investment, maintaining its position as one of the fastest-growing major economies for the third consecutive year. A substantial investment in foundational areas such as cloud computing, IT modernisation, digital customer experience and digital engineering projects, will significantly contribute to the growth of Information Technology
industry in India. Additionally, GenAI remains a key focus area in the industry’s growth trajectory.
Company overview
Zensar Technologies Limited is one of the leading technology solutions companies, renowned for its prowess in delivering innovative digital solutions through its expertise in experience design, data engineering and advanced analytics. Zensar enables its clients to thrive and succeed in a dynamic environment by conceptualising, building and managing digital products. With its headquarters in Pune, India, the Company operates as a part of the RPG Group, catering to over 145 global clients.
Despite the uncertainties in target markets, in US $ terms, Zensar’s Europe region saw a constant currency growth of 8.9% YoY, Africa grew by 14.7% and US reported a decline of 6.9%.
Opportunities
- The Company can leverage the demand for the IT industry to facilitate digital transformations of businesses. Innovative solutions for process automation, document management and workflow optimisation can enable the Company to outperform its peers.
- The paradigm shift towards cloud-based solutions presents a lucrative opportunity for Zensar to broaden its portfolio of cloud offerings, scalable and cost-effective services to clients.
- It is imperative for banking, healthcare and government sectors to adhere to regulatory compliance requirements. Thereby, it presents a profitable opportunity for the Company to demonstrate its prowess in providing compliance-focused solutions to meet this increasing market demand.
- AI and ML technologies are playing a crucial role in revolutionising various industries; investing in these technologies can enable the Company to broaden its portfolio in the coming years.
- Entering into emerging markets can provide a profitable opportunity for the Company to expand its customer base. The requisite to develop software solutions to modernise operations and enhance efficiency will propel the growth of the Company.
Challenges
- With IT services sector being fiercely competitive, Zensar faces competition from both established players and emerging startups. The key to maintain a competitive edge is through continuous innovation.
- With the advent of technology, cyberattacks have skyrocketed. It is imperative for the Company to invest in robust security measures to safeguard client data.
- The dearth of skilled software engineers and developers poses a significant challenge for the industry. It is important for Zensar to attract and retain top talent to ensure the quality of its products remain uncompromised in the coming years.
- The demand for software is subject to economic downturns or fluctuations in the global market. A reduced investment in the IT industry during such period can adversely affect the Company’s revenue and growth.
Enterprise Risk Management
To safeguard the organization’s strategic objectives and operational endeavours, Zensar has established a robust Enterprise Risk Management (ERM) program through which risks are assessed and managed at various levels in the organization with a top-down and bottom-up approach covering the enterprise, business units, geographies and functions. The ERM program covers compliance with applicable government and regulatory requirements, and potential risk areas in various economic, social, and industrial environments that Zensar operates in. The ERM framework encompasses the risks that the organization is facing under different categories, such as strategic, operational/ cybersecurity, financial, compliance/regulatory, and ESG/ climate risks, with each of these categories having internal/ external dimensions. Systematic and proactive identification of risks and mitigations thereof enable effective and timely decision-making.
The risk score is calculated based on the probability and impact. Using a combination of risk impact from insignificant to catastrophic, and risk probability ranging from rare to almost certain, a risk score is deduced which helps to identify if the risk rating is low, medium, or high. The risk scores are then used to arrive at a risk prioritization matrix, which guides the allocation of time and resources towards risk mitigation.
Company Essentials
| Market Cap | ₹ 17,445.51 Cr. |
| No. of Shares | 22.69 Cr. |
| P/E | 34.29 |
| P/B | 6.29 |
| Div. Yield | 1.17 % |
| DEBT | ₹ 0 Cr. |
| Promoter Holding | 49.13 % |
| ROE | 19.36 % |
Profit & Loss
(All Figures in Cr. Adjusted EPS in Rs.)
| Year | 2020 | 2021 | 2022 | 2023 | 2024 |
| Net Sales | 1,370 | 1,361 | 1,628 | 1,823 | 2,019 |
| Profit Before Tax | 304 | 373 | 430 | 403 | 627 |
| Net Profit | 231 | 289 | 321 | 308 | 477 |
| Adjusted EPS (Rs.) | 10.25 | 12.84 | 14.21 | 13.62 | 21.06 |
Shareholding Pattern
- Promoter 49.13%
- DII 19.05%
- FII 14.84%
- Public 16.97%
Strengths
The Company is Virtually Debt Free.
PEG ratio is 0.63%.
The company has effective cash conversion ratio of 96.71.
The Company has healthy Operating Margin of 25.72%.
Limitations
Company has high debtor days of 135.45.
- The End
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