Tech Mahindra Ltd Vs Zensar Technologies – Which One Deserves a Spot in Your Portfolio?

Company Overview of Zensar Technologies Ltd

Zensar Technologies Limited is a company that provides digital solutions and technology services. They offer a variety of IT services and solutions through two segments: Digital and Application Services (DAS) and Digital Foundation Services (DFS).

The DAS segment focuses on custom application management services for application development, maintenance, support, modernization and testing across different technology and industry sectors. The DFS segment offers infrastructure management services, including hybrid IT, digital workspace, dynamic security and unified IT services managed through a service platform that utilizes automation, autonomics and machine learning.  

Company Overview of Tech Mahindra Ltd

Tech Mahindra Limited, headquartered in India, offers digital transformation, consulting and business re-engineering services and solutions. The company operates in two segments: Information Technology (IT) Services and Business Processing Outsourcing (BPO). 

Its key geographical segments are the Americas, Europe, India and other parts of the world. Tech Mahindra’s range of products and services includes telecom services, consulting, application outsourcing, infrastructure outsourcing, engineering services, business services group, platform solutions and mobile value-added services. 

The Stock Performance of Zensar Technologies

The table below displays the month-by-month stock performance of Zensar Technologies Ltd for the past year.

The Stock Performance of Tech Mahindra Ltd

The table below displays the month-by-month stock performance of Tech Mahindra Ltd for the past year.

Fundamental Analysis of Zensar Technologies Limited

Zensar Technologies Ltd is a global IT services and solutions provider headquartered in Pune, India. Established in 1922, the company specializes in digital transformation, cloud services and enterprise applications, catering to a diverse clientele across various industries. With a strong focus on innovation and technology, Zensar aims to empower businesses to enhance their operational efficiency and adapt to the ever-evolving digital landscape.  

The stock is priced at ₹627.55 with a market cap of ₹14,252.25 crore and a dividend yield of 1.43%. It has a 1-year return of 2.70%, a 6-month return of -8.79% and is 56.95% away from its 52-week high. The 5-year CAGR stands at 47.28%, with an average net profit margin of 8.66%.

• Close Price ( ₹ ): 627.55
• Market Cap ( Cr ): 14252.25
• Dividend Yield %: 1.43
• 1Y Return %: 2.70
• 6M Return %: -8.79
• 1M Return %: -16.34
• 5Y CAGR %: 47.28
• % Away From 52W High: 56.95
• 5Y Avg Net Profit Margin %: 8.66 

Fundamental Analysis of Tech Mahindra Limited

Tech Mahindra Limited, short for Tech Mahindra, is a prominent global technology company based in India, specializing in IT services and solutions. Established in 1986, it has grown to become a leading player in the telecommunications and business process outsourcing sectors, providing innovative offerings to a diverse range of industries.    

The stock is priced at ₹1272.75, with a market cap of ₹124,601.42 crore and a dividend yield of 2.83%. It has a 1-year return of 0.51%, a 6-month return of -21.42% and is 42.03% away from its 52-week high. The 5-year CAGR is 18.48%, with a 9.52% average net profit margin.

• Close Price ( ₹ ): 1272.75
• Market Cap ( Cr ): 124601.42
• Dividend Yield %: 2.83
• 1Y Return %: 0.51
• 6M Return %: -21.42
• 1M Return %: -14.89
• 5Y CAGR %: 18.48
• % Away From 52W High: 42.03
• 5Y Avg Net Profit Margin %: 9.52 

Financial Comparison of Zensar Technologies and Tech Mahindra Ltd

The table below shows a financial comparison of Zensar Technologies Ltd and Tech Mahindra Ltd.

Points to be noted:

• (TTM) Trailing 12 Months – Trailing 12 months (TTM) is used to describe the past 12 consecutive months of a company’s performance data when reporting financial figures.
• EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization): Measures a company’s profitability before accounting for financial and non-cash expenses.
• PBIT (Profit Before Interest and Tax): Reflects operating profit by excluding interest and taxes from total revenue.
• PBT (Profit Before Tax): Indicates profit after deducting operating costs and interest but before taxes.
• Net Income: Represents the company’s total profit after all expenses, including taxes and interest, are deducted.
• EPS (Earnings Per Share): Shows the portion of a company’s profit allocated to each outstanding share of stock.
• DPS (Dividend Per Share): Reflects the total dividend paid out per share over a specific period.
• Payout Ratio: Measures the proportion of earnings distributed as dividends to shareholders. 

Dividend of Zensar Technologies and Tech Mahindra Ltd

Zensar Technologies and Tech Mahindra Ltd. both have a consistent track record of paying interim and final dividends. Zensar offers dividends ranging from ₹1.5 to ₹7, while Tech Mahindra’s dividends range from ₹12 to ₹32, showcasing stronger payouts. Check the table for complete details. 

Advantages and Disadvantages of Investing in Zensar Technologies

Zensar Technologies Ltd

The primary advantage of Zensar Technologies Ltd lies in its strong focus on digital transformation, AI-driven solutions and innovation. The company’s deep expertise in IT services and its strategic global presence position it for long-term growth in a rapidly evolving tech landscape.

1. Digital Transformation Focus: Zensar Technologies specializes in providing digital transformation services, helping businesses across industries improve operational efficiency and customer engagement. With a strong focus on cloud computing, AI and automation, it ensures businesses stay competitive in the digital age.
   
2. Global Market Reach: Zensar operates in over 20 countries, serving clients in diverse industries, including retail, manufacturing and banking. Its global footprint allows the company to tap into multiple markets and offer tailored solutions to meet the needs of international clients.
   
3. Strong Client Portfolio: Zensar has a well-established client base, including Fortune 500 companies. With long-term partnerships in key industries, such as financial services and retail, Zensar is well-positioned to generate stable revenues and foster long-term growth in its core markets.
   
4. Innovation and R&D Investment: The company places a strong emphasis on research and development, continuously improving its product offerings. Through innovation, Zensar provides next-gen solutions, helping clients navigate complex challenges in areas like AI, machine learning and blockchain.
   
5. Sustainability and Social Responsibility: Zensar integrates sustainability into its business operations, promoting eco-friendly practices and contributing to social causes. Its commitment to corporate social responsibility (CSR) enhances the company’s brand image and positions it as a responsible industry leader.

The main disadvantage of Zensar Technologies Ltd lies in its dependency on the IT services industry, which is highly competitive and susceptible to market fluctuations.  

1. Market Competition: Zensar faces intense competition from larger IT service providers like TCS, Infosys and Wipro, which may impact its ability to gain market share. The pressure to innovate and provide differentiated solutions adds to the competitive landscape.
   
2. Revenue Concentration: A significant portion of Zensar’s revenue is derived from a few key clients. This dependence on a limited customer base increases vulnerability if any major client reduces its contracts or switches to competitors, impacting revenue stability.
   
3. Economic Sensitivity: Zensar’s business is influenced by global economic conditions. Economic slowdowns, particularly in key markets like the US and Europe, could result in delayed or reduced IT spending, which could negatively affect its financial performance and growth prospects.
   
4. Adoption of Emerging Technologies: While Zensar focuses on digital transformation, it faces the risk of falling behind in adopting newer technologies or failing to integrate them effectively. This could impact its competitive position, especially in fields like AI, blockchain and IoT.
   
5. Currency Fluctuations: As a global player, Zensar is exposed to currency exchange rate fluctuations, especially in markets like the US and Europe. Unfavourable movements in currency rates can affect profitability, especially in regions where the company generates substantial revenue.

Advantages and Disadvantages of Investing in Tech Mahindra Ltd

Tech Mahindra Ltd

The primary advantage of Tech Mahindra Ltd lies in its robust position within the IT services sector, focusing on digital transformation, AI and cloud solutions. The company’s global reach, coupled with a wide array of industry-specific solutions, positions it as a leader in the technology services space.

1. Diverse Service Offerings: Tech Mahindra provides a wide range of services, including IT consulting, cloud computing, digital transformation and enterprise solutions. Its ability to cater to various industries, such as telecom, healthcare and banking, ensures broad market appeal and consistent growth.
   
2. Global Presence and Client Base: The company operates across over 90 countries, serving clients worldwide. This global footprint allows Tech Mahindra to leverage international business opportunities, forming long-term partnerships with leading firms across diverse sectors, contributing to stable revenue streams.
   
3. Focus on Digital Transformation and Innovation: Tech Mahindra focuses heavily on digital services, including AI, machine learning, blockchain and cybersecurity. These emerging technologies position the company as a key player in the digital transformation space, helping clients stay competitive in the evolving tech landscape.
   
4. Strong Financial Performance and Stability: Tech Mahindra has consistently reported strong financial results, driven by robust growth in its core businesses. The company’s solid financial foundation, along with its emphasis on profitability and operational efficiency, ensures long-term stability and investor confidence.
   
5. Strategic Acquisitions and Partnerships: Tech Mahindra pursues strategic acquisitions and partnerships to enhance its service offerings and expand its capabilities. Collaborations with global tech giants like Amazon Web Services (AWS) and acquisitions in AI and automation allow the company to stay ahead of industry trends.

The main disadvantage of Tech Mahindra Ltd is its heavy reliance on the IT and telecom industries, making it vulnerable to market fluctuations and technological disruptions. Any downturn or rapid changes in these sectors could impact the company’s growth and profitability.

1. Sector Concentration: Tech Mahindra’s focus on IT and telecom services leaves it exposed to risks in these industries. Changes in market trends, such as reduced demand for telecom services, could lead to slower growth, particularly for its telecom-focused solutions.
   
2. High Competition in the IT Services Market: The IT services market is highly competitive, with major players like TCS, Infosys and Wipro vying for market share. Tech Mahindra faces pressure to innovate and differentiate itself continually to maintain its position in this crowded market.
   
3. Dependency on Key Clients: Tech Mahindra derives a significant portion of its revenue from a few large clients. A loss of major contracts or a reduction in business from key clients could have a substantial impact on the company’s financial performance and stock price.
   
4. Fluctuations in Currency Exchange Rates: As a global company, Tech Mahindra is exposed to currency risk. Fluctuations in exchange rates can affect its profitability, especially since a large portion of its revenue comes from international markets, including North America and Europe.
   
5. Adapting to Rapid Technological Change: The tech industry is evolving rapidly and Tech Mahindra must continually adapt to new technologies such as AI, blockchain and cloud services. Failing to keep up with the pace of innovation could lead to a loss of competitive edge in the market.

How to Invest in Tech Mahindra and Zensar Technologies Stocks?

If you’re interested in investing in Tech Mahindra and Zensar Technologies Stocks, you can do so effortlessly through Alice Blue, which offers zero brokerage on equity delivery trades, allowing you to purchase stocks without any additional charges.

Step 1: Open a Demat & Trading Account

• Visit the Alice Blue website.
• Click on “Open Demat Account” and complete the registration process.
• Upload your PAN, Aadhaar and bank details for verification.

Step 2: Fund Your Trading Account

• Log in to Alice Blue and navigate to the Funds section.
• Deposit money using UPI, Net Banking, or NEFT/RTGS for seamless transactions.

Step 3: Search & Analyze Tech Mahindra and Zensar Technologies Stocks

• Use the search bar to find Tech Mahindra and Zensar Technologies Stocks.
• Review the stock’s market price, charts and company insights before making a decision.

Step 4: Place Your Buy Order

• Click “Buy” and select either a Market Order (instant purchase) or a Limit Order (buy at a specified price).
• Enter the quantity and confirm your order to complete the purchase.

Zensar Technologies vs. Tech Mahindra – Conclusion

Zensar Technologies is a strong player in the digital transformation and IT services space, focusing on AI, cloud solutions and automation. With a solid client base and global presence, it has consistent growth potential but faces competition in a rapidly evolving industry.

Tech Mahindra is a global leader in IT services, specializing in digital transformation, AI and cloud solutions. Its vast service offerings, strong financial stability and strategic acquisitions position it well for sustained growth, despite facing fierce competition in the global IT market.

Zensar Technologies vs. Tech Mahindra – FAQ

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Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.