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IT Stock Is Trading Close to 52-Week Low. Bullies Breakages Q1 Results

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Zensar Technologies reported revenues of $155.9 million, above its 1.1 million estimates and up 1.8% sequentially. Revenues increased over 26% from the prior quarter and 3% from quarter to quarter in constant currency (CC) terms.

Deal wins for the quarter were $125 million, a strong mix of new wins and renewals, down 24.5% QoQ and up 29.3% YoY. The manufacturing and high-tech sectors are slowing significantly. According to brokerage and research firm ICICI Securities, a decrease in discretionary spending is also seen in the consumer services industry.

Considering the macro-uncertainties, the letter claimed that “management is detecting pockets of a downturn in business” and that “a few clients have suggested a decrease in spend.” The brokerage firm has kept its buy rating on Zensar Tech shares and reduced its target price from 295 to 276.

The management anticipates that the ongoing macro-challenges and supply-side restrictions will immediately impact going forward. Given the supply-side problems, the gradual resumption of travel and facility costs, and expenditures for expansion, ICICI Securities anticipates margin pressure.

Further, it anticipates that a weak supply side engine and client cuts or postponements of discretionary spending in the consumer services, high-tech, and manufacturing sectors due to a difficult macroeconomic environment will likely constrain future earnings growth.

The shares of Indian IT service firm Zensar Tech are trading close to their 52-week low. The value of the IT stock has decreased by more than 57 per cent so far in 2022.

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