Zensar Technologies: Should you buy the stock after September quarter earnings? Here's what brokerages say

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Zensar Technologies, a mid-sized IT services company and part of the RPG Enterprise Group, dropped 5.6% to ₹519.25 apiece during Wednesday's trade after the company posted its Q2 FY24 earnings. The company posted a consolidated net profit of ₹174 crore, a 205% surge compared to ₹57 crore posted in Q2 FY23. On a QoQ basis, net profit showed an 11.53% increase, while revenue growth remained relatively flat, with a slight YoY uptick of 0.5% and a QoQ increase of 1.1% to reach ₹1,240 crore.

Within its business segments, Banking and Financial Services reported a QoQ revenue growth of 3.1% and a YoY growth of 7.8% in constant currency. Manufacturing and Consumer Services reported a QoQ growth of 6.7% and a YoY decline of 0.7% in constant currency. Hitech reported a QoQ decline of 8.0% and a YoY decline of 16.9% in constant currency.

Healthcare and Life Sciences reported a QoQ decline of 1.5% and a YoY decline of 4.7% in constant currency, according to the company's earnings report. Following the company's Q2 performance, domestic brokerage firm Equirus Securities noted that Zensar's increasing focus on execution is yielding positive results. The company's margins continue to exceed expectations, which bodes well for a turnaround in sales growth and enhances Zensar’s capability to strike a balance between growth and margins.

Also, the rich experience and pedigree of the newly appointed CEO can potentially change the growth profile over the long term. Towards this, Zensar had already started making a strong push towards client mining and hunting efforts with the creation of a strong leadership team, the brokerage said. However, in the near term, like peers, Zensar is also witnessing demand headwinds with slower client