Zensar Tech. (ZENSARTECH)

FairStock Score: 63/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 1/1

Key Financials

Strengths

• High capital efficiency with ROE of 18.19% and ROCE of 21.28%.
• Nearly debt-free balance sheet with D/E of 0.03.
• Strong financial health signals: Piotroski F-score 8/9 and Altman Z-score 3.91.
• Promoter holding of 49.01% aligns ownership, and dividend yield of 2.30% offers some return support.

Concerns

• Price of ₹566.15 is far above Graham Number ₹362.73 and DCF value ₹216.79, leaving a negative margin of safety of about -55.69%.
• PEG ratio of 3.53 is rich relative to the 13.44% profit growth and 6.91% five-year revenue CAGR.
• Free cash flow of ₹92 Cr is low compared with net profit of ₹200 Cr, raising questions about earnings quality.
• Negative EV/EBITDA of -49.72 makes EBITDA-based valuation unreliable and needs deeper scrutiny.

AI Analysis

When I look at Zensar, I see a decent, steady business, but not one that excites me at today's price. The financial health is solid: return on equity of 18.19%, return on capital employed of 21.28%, and debt-equity of only 0.03. A Piotroski F-score of 8/9 and an Altman Z-score of 3.91 confirm a fundamentally sound balance sheet. Promoters hold 49.01%, so their interests are reasonably aligned with minority shareholders. The company compounds at a moderate pace—latest sales growth is 10.86%, profit growth is 13.44%, but the five-year revenue CAGR is only 6.91%. That is why I would call it a stalwart, not a fast grower; FairStock's 62/100 'steady' label matches my view. Still, I must be disciplined about price. At ₹566.15, the market cap is ₹12,844 Cr, and the stock trades at 16.91 times earnings and 3.16 times book value. The Graham number is ₹362.73, and the DCF value shown is ₹216.79. That means I have no margin of safety—in fact, a negative margin of about 55.69%. The PEG ratio of 3.53 also tells me the market is paying a heavy price for the growth on offer. Free cash flow of ₹92 Cr is thin relative to net profit of ₹200 Cr, so reported earnings are not fully converting into cash. The dividend yield of 2.30% is a small comfort, but it cannot compensate for overvaluation. Ben Graham taught me to buy with a margin of safety. Here, the numbers say wait for a significantly lower price before committing capital. If the stock falls nearer to the Graham number, the risk-reward becomes far more interesting.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer