Business Overview

Zensar Technologies is a Pune-headquartered, mid-sized digital engineering and IT services company, part of the Mumbai-based RPG Group (Harsh Goenka, Chairman). Incorporated in 1963 and rebranded in 2021 around an “experience-led everything” strategy, Zensar today serves 178+ active clients across Banking, Financial Services & Insurance (BFSI), Hi-Tech & Manufacturing, Consumer Services, Healthcare & Life Sciences, and Utilities, with a workforce of over 10,700 professionals across 30+ global locations (India, USA, UK, Europe, South Africa).

The company operates through two reporting segments — Application Management Services (AMS) and Infrastructure Management Services (IMS) — with digital and application services (testing, modernization, cloud-native application development, data engineering, AI/GenAI, and enterprise platforms such as Oracle, Salesforce and SAP) contributing the bulk of revenue. Zensar has been actively investing in agentic AI and GenAI-led delivery, cloud (notably a new AWS Data & Analytics Competency), and has bolstered its US life-sciences presence via the FY25 acquisition of BridgeView Life Sciences.

Historical Financials

Zensar’s revenue has compounded at a modest 9% CAGR over 5 years (8% TTM), but profitability has scaled meaningfully faster — 19% PAT CAGR over 5 years and 27% over 3 years — aided by margin discipline, tax efficiency and other income from a growing treasury book.

DCF Valuation

A 10-year discounted free cash flow model, using FY26 normalised FCF of ₹719 Cr as the base, tapering growth from 10% (Years 1–3) to 8% (Years 4–6) to 6% (Years 7–10), a WACC of 12% and terminal growth of 5%, points to meaningful intrinsic value headroom over the current market price.

At ₹673/share, the DCF fair value implies ~56% upside to CMP — broadly corroborated by Motilal Oswal’s independently derived target of ₹640 (31% upside), suggesting the market is pricing in more conservative growth/margin assumptions than the model above.

Relative Valuation & Peer Multiples

Zensar trades at a steep discount to the broader IT services peer set — a function of its smaller scale, historically slower revenue growth and elevated working-capital days — but also reflects a much lower starting valuation base, offering re-rating potential if execution stays consistent.

Applying a conservative re-rated multiple of 15x–18x to FY26 EPS of ₹34.05 (below peer average, given Zensar’s smaller size and single-digit growth profile) yields a fair value band of roughly ₹511–₹613 per share, consistent with the DCF-implied upside.

Asset-Based Valuation (NAV)

As an asset-light IT services business, book value is a conservative valuation floor rather than a primary anchor. Consolidated net worth stood at ₹4,719 Cr (equity capital ₹45 Cr + reserves ₹4,674 Cr) as of Mar-2026, translating to a book value of ~₹207/share. The company holds ₹1,921 Cr of investments (largely treasury/liquid funds) against just ₹79 Cr of borrowings — a strong net-cash position that provides valuation and balance-sheet downside protection.

Earnings Power Value (EPV)

EPV strips out growth assumptions and capitalises normalised, sustainable NOPAT at the cost of capital — a useful “no-growth floor” for the business. Using FY26 operating profit of ₹916 Cr, normalised at a 24% effective tax rate (NOPAT ≈ ₹696 Cr) and capitalised at 12% WACC, EPV works out to approximately ₹5,800 Cr, or roughly ₹255/share — below CMP, as expected, since EPV excludes the growth optionality from AI-led deals and margin expansion that DCF and relative valuation both credit.

Sum-of-the-Parts (SOTP)

Zensar operates as a largely integrated digital services business rather than a multi-vertical conglomerate, so SOTP is applied conservatively across its two reporting lines.

Adding net cash of ₹1,842 Cr to the SOTP-derived enterprise value of ~₹9,045 Cr gives an equity value of ~₹10,887 Cr, or approximately ₹479/share — positioned between the EPV floor and DCF/relative valuation ceiling, reinforcing the case that CMP sits below intrinsic value on most methodologies.

Buy Range

Buy Scenario

Sell Range

Sell Scenario

Future Growth Drivers

Management guidance points to FY27 EBITDA margin of ~16.1%, supported by an AI-led strategy emphasising large deal wins and sector-focused go-to-market. The order book surged 122.9% QoQ to $401.8M exiting FY26 — the strongest forward indicator in several years — while the recent AWS Data & Analytics Competency certification and BridgeView Life Sciences acquisition extend Zensar’s addressable market in cloud/data and US healthcare respectively. Active client additions (+7.2% YoY to 178) and improving net profit margins (13.5%, +120bps YoY) both point to a business scaling more profitably even as top-line growth stays moderate.

Risks & Catalysts