Zensar Tech gains 4.5% on grant of US patent for ZenVerse

The patent is on the idea of ZenVerse which is designed to be a direct platform or channel for the entire organisation to interact with the organisation's CEO, CXOs

Zensar Technilogies shares gained 4.5 per cent to quote at Rs 180.3 on the BSE on Tuesday after the company was granted a US patent for its direct conversation platform, ZenVerse.

The patent, granted by the US Patent and Trademark office (USPTO), is on the idea of ZenVerse which is designed to be a direct platform or channel for the entire organization to interact with the organisation’s leadership including CEO, CXOs. "These interactions are at an individual level and since inception it has had 68 releases over 2.1 million sessions used by more than 9,000 global associates. This platform was created in-house by Zenlabs, Zensar’ s innovation hub, incorporating AI as its core," it said in a statement.

"Our Zenlabs team is focused on creating innovative solutions which directly impact growth, customer experience and employee engagement. This patent validates our future centric thinking along with creating a practical digital strategy to significantly advance employee engagement at all levels," said  Prameela Kalive, Chief Operating Officer at Zensar.

Analysts at HDFC Securities Zensar maintain their positive outlook on the sector despite the sector recently re-rating to +2-SD valuations as they believe the sector is poised for higher multiples, led by the longevity of high-growth period (current valuations imply 5 per cent 10-year CAGR) with ‘multi-year’ growth tailwind from the economic crisis, the continuity of high (increasing) payouts, and global ‘best in class metrics’ across growth, free cash generation, and balance sheet strength. "We reckon that the sector (including mid-tier) can command multiples higher than historical averages, supported by the sector’s resilience and growth longevity (in some cases anti-fragility)," it said in a sector report dated August 24.

"Despite the Covid-19 disruption, IT saw limited impact on revenue, strong deal signings, and the closure of certain marquee deals. This led the street to rethink the resilience, adaptability, and terminal growth rates of the business model. In conjunction with the fall in risk- free rates, the sector witnessed decent multiple re-ratings across the board... As more of the physical economy migrates to the Digital space, Indian IT would be the key second-order beneficiary, in our view," said Motilal Oswal Financial Services in a report dated August 6.

For June quarter of FY21, Zensar Technologies reported a net profit of Rs 73.3 crore, down 6.9 per cent over the corresponding quarter last year and revenues of Rs 991.2 crore, down 7 per cent. In dollar terms, net profit was down 14.5 per cent at $9.7 million and revenues of $130.8 million, down 14.7 per cent and 12.1 per cent in constant currency terms.

The company reported new deal wins worth $150 million during Q1FY21, and currently has a deal pipeline of $1.5 billion. “Our global talent has been very productive, in the new 100 per cent remote model working closely with our customers as they embark on transformation path to recovery and resilience,” said Sandeep Kishore, Chief Executive Officer and Managing Director, Zensar Technologies.

"Though management is making efforts to shift focus from retail to financial services and Hi-tech, the impending weakness in these sectors remains a challenge as well as the new initiatives to revamp financial services vertical need to be monitored. The management remains optimistic on maintaining margins, this coupled with healthy deal pipeline augurs well for the company. However given the recent run-up in stock price we believe most of these factors are largely priced in," said analysts at Chola Securities. 

Those at ICICI Securities, meanwhile, believe that the company saw a healthy improvement in its deal TCV (up 36% QOQ) and has healthy deal pipeline of US$1.5 billion. "Also, Zensar’s hi tech (46% of revenues) vertical saw an improvement of 3.5% QoQ (in CC terms) in the quarter, which is expected to further improve in coming quarters. This coupled with bottoming out of retail vertical, improvement in cloud revenues and ramp up of projects will lead to healthy improvement in revenues on coming quarters," they said in a post-result report.

At 10:42 am, the stock was up 2.3 per cent at Rs 176.6 per share. In comparison, the S&P BSE Sensex was trading 0.45 per cent higher. 

Zensar is a leading digital solutions and technology services company that specializes in partnering with global organizations across industries on their digital transformation journey