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CBDT Clarifies Guidelines On Section 194O, 194Q & 206C Of The Income Tax Act

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Taxes

oi-Vipul Das

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The Central Board of Direct Taxes under the supervision of the Ministry of Finance and Department of Revenue has issued guidelines under sub-section (4) of section 194-0, sub-section (3) of section 194Q, and subsection (I-I) of section 206C of Income-tax Act, 1961. The department clarified these guidelines in a circular released on November 25, 2021.

CBDT Clarifies Guidelines On Section 194O, 194Q & 206C Of The Income Tax Act

Section 194-O in the Income-tax Act 1961

According to the department “Finance Act, 2020 inserted a new section 194-0 in the Income-tax Act 1961which mandates that with effect from 1st day of October 2020, an e-commerce operator shall deduct income-tax at the rate of one per cent of the gross amount of sale of goods or provision of services or both, facilitated through its digital or electronic facility or platform. However, exemption from the said deduction has been provided in the case of certain individuals or Hindu undivided families subject to fulfillment of specified conditions. This deduction is required to be made at the time of credit of the amount of such sale or service or both to the account of an e-commerce participant or at the time of payment thereof to such e-COmmerce participant, whichever is earlier.”

Section 206C of the Income Tax Act

CBFT has clarified in its official statement that “Finance Act, 2020 also inserted sub-section ( 11-1 ) in section 206C of the Act which mandates that with effect from I” day of October 2020 a seller receiving an amount as consideration for the sale of any goods of the value or aggregate of such value exceeding Rs. 50 lakhs in any previous year shall collect from the buyer, a sum equal to 0.1 per cent of the sale consideration exceeding Rs. 50 lakhs as income tax. The collection is required to be made at the time of receipt of the amount of sale consideration. Seller is defined as the person whose total sales or gross receipts or turnover from the business carried on by him exceed Rs. 10 Cr during the financial year immediately preceding the financial year in which the sale of good is carried out. Central Government has been authorised to specify by notification in the Official Gazette, the person who would not be considered as the seller for the purposes of this section, subject to the fulfillment of certain conditions as specified therein.”

Section 194Q of the Income Tax Act

CBDT has clarified in its official circular that “Finance Act, 2021 inserted a new section 194Q to the Act which took effect from 1st day of July 2021. It applies to any buyer who is responsible for paying any sum to any resident seller for the purchase of any goods or the value or aggregate of value exceeding Rs. 50 lakh in any previous year. The buyer, at the time of credit of such sum to the account of the seller or at the time of payment, whichever is earlier, is required to deduct an amount equal to 0. 1 % of such sum exceeding Rs. 50 lakh as income tax. A buyer is defined to be the person whose total sales or gross receipts or turnover from the business carried on by him exceed Rs. 10 Cr during the financial year immediately preceding the financial year in which the purchase of goods is carried out. Central Government has been authorised to specify by notification in the Official Gazette, the person who would not be considered as a buyer for the purposes of this section, subject to fulfillment of specified conditions.”

Read the full circular here.

Story first published: Saturday, November 27, 2021, 13:09 [IST]



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PNB To Slash Savings Account Interest Rates On Next Week: Details Inside

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Punjab National Bank Savings Accounts

Punjab National Bank offers the following Saving Deposit (General) Accounts to serve all sorts of customers and their basic personal financial needs.

  • PNB Unnati Saving Fund Account
  • PNB Saving Account Product For Premium Customers
  • PNB Saving Fund Prudent Sweep Deposit Scheme For Individuals
  • PNB Saving Fund Prudent Sweep For The Accounts of Institutions
  • PNB Junior Saving Fund Account
  • Basic Saving Bank Deposit Account (BSBDA)
  • PNB Rakshak Scheme
  • Scheme For Providing Overdraft Facility To Pensioners
  • PNB Power Savings
  • PNB Samman Savings Account
  • PNB MySalary Account
  • Premium Saving Account PNB Best Customer
  • PNB Pratham Saving Account
  • PNB ‘Select’ Saving Account

PNB Savings Account Interest Rates

PNB Savings Account Interest Rates

On Domestic & NRI Saving Accounts, PNB would provide the following interest rates from 1st December 2021.

Deposit Balance Rate Of Interest
Saving Fund Account Balance below Rs. 10 Lakh 2.80% p.a.
Saving Fund Account Balance of Rs. 10 Lakh & above 2.85% p.a.
Source: Bank Website

PNB Minimum Quarterly Average Balance Requirement

PNB Minimum Quarterly Average Balance Requirement

For a savings account, PNB currently allows the following minimum Quarterly Average Balance (QAB).

Area Min. QAB Initial Deposit
Rural Rs. 500/- Rs. 500/-
Semi-Urban Rs. 1000/- Rs. 1000/-
Urban & Metro Rs. 2000/- Rs. 2000/-
Source: Bank Website

PNB Savings Account Maintenance Charges

PNB Savings Account Maintenance Charges

For failing to maintain a minimum balance in a savings account, PNB is currently levying the following charges.

Charges per Qtr. for Not Maintaining Minimum Balance
Shortfall In Quarterly Average Balance (QAB) Rural Semi-Urban Urban/ Metro
Up To 50% Rs. 50/- Rs. 100/- Rs. 150/-
Above 50% Rs. 100/- Rs. 150/- Rs. 250/-
Source: Bank Website



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El Salvador ‘bought the dip’ and purchased 100 extra bitcoins

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El Salvador President Nayib Bukele on Friday said his country had bought an additional 100 bitcoins after the digital currency declined in value, building on the country’s cryptocurrency stake despite vast criticism about the government’s strategy.

Bitcoin, the world’s largest digital currency, on Friday fell as much as 7.8 per cent to $54,377, its lowest since October 12. It was on track for its biggest one-day drop since September 20 and is now down more than 20 per cent since touching a record high of $69,000 earlier this month.

“El Salvador just bought the dip. 100 extra coins acquired with a discount. #Bitcoin,” Bukele tweeted on Friday.

As of October 28, the country had bought 1,120 bitcoins.

Also see: El Salvador sees greener cryptocurrency mining in its future

In September, El Salvador became the world’s first nation to adopt bitcoin as legal tender, a move that generated global media attention but also attracted criticism from the opposition and foreign financial institutions.

Bukele has championed the adoption of bitcoin, arguing it will help millions of Salvadorans living abroad send remittances back home. He has also said it will bring financial inclusion, investment, tourism, and development.

But the International Monetary Fund (IMF) on Monday said El Salvador should not use bitcoin as legal tender considering risks related to the cryptocurrency.

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High Return Pension Funds On Government-Securities (G-Sec) Scheme

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Personal Finance

oi-Kuntala Sarkar

|

The National Pension System (NPS) allows the subscribers to accept the asset allocation under G-Sec (government securities). The National Pension System (NPS), offered by the government of India permits the policyholders to select between active and auto choices. NPS G-sec funds have performed quite well in the past years, especially in the last year. The NPS G-sec pension funds have given double-digit returns over 3 years.

High Return Pension Funds On Government-Securities (G-Sec) Scheme

The active choice allows the subscriber to choose among equity, corporate debt, and G-Sec (government securities). While the auto choice allows the policyholder’s allocation in the G-Sec asset class, which increases as one grows older. In the active choice, asset allocation will be decided depending on the age and the pre-decided grid under the NPS regulations. The pension fund manager will take care of this. On the other hand, in the auto choice, after the age of 55 years of the policyholder, the G-sec will range from 75-90%, which will certainly depend on the selected life-cycle fund. This ensures safeguarding the corpus over the long term against market volatility.

High return from NPS G-Sec Pension Fund

Till November 17, 2021, the 7 pension fund managers have given high returns of around 10.52%-11.71%, over 3 years. The LIC Pension Fund has given the highest return at 11.71%, the HDFC Pension Fund has given return at 11.21%, the Kotak Pension Fund has given return at 11.03%, the SBI Pension Fund has given return at 10.88%, the Birla Sun Life Pension Scheme has given returns at 10.86%, the ICICI Prudential Pension Fund has given return at 10.70%, while the UTI Retirement Solutions has given return at 10.52%. Although UTI stayed at the lowest position, even this return is also higher than the benchmark returns. Over 5 years of NPS G-Sec schemes, LIC topped among all 7 pension funds, and given return at 8.67%, followed by HDFC Pension Fund at 7.7%.

On the other hand, the benchmark CIL All Sovereign Bond TRI has given return at 10.51%, and debt: gilt has given return at 8.91%.

Story first published: Saturday, November 27, 2021, 11:15 [IST]



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Axis Bank Modifies Interest Rates On Domestic & NRI Fixed Deposits

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Investment

oi-Vipul Das

|

Axis Bank, the third-largest private sector bank of India has revised its interest rates on Domestic Fixed Deposits, Domestic Fixed Deposits Plus, NRI Fixed Deposits/FCNR Deposit, and NRI Fixed Deposits Plus. The new rates for domestic deposits are in effect on November 10, 2021, the new rates for domestic fixed deposits plus, NRI fixed deposit plus are in action on November 26, 2021, and the new rates for NRE Fixed Deposits are in force on November 1, 2021.

Axis Bank Domestic Fixed Deposit Rates

Axis Bank Domestic Fixed Deposit Rates

On deposits of less than Rs 2. Cr maturing in 7 days to less than 10 years, Axis Bank is currently offering the following interest rates with effect from 10th November 2021 to both regular and senior citizens.

Tenure Rates for Public In % (p.a.) Rates for Senior Citizens In % (p.a.)
7 days to 14 days 2.5 2.5
15 days to 29 days 2.5 2.5
30 days to 45 days 3 3
46 days to 60 days 3 3
61 days 3 3
3 months 3.5 3.5
4 months 3.5 3.5
5 months 3.5 3.5
6 months 4.4 4.65
7 months 4.4 4.65
8 months 4.4 4.65
9 months 4.4 4.65
10 months 4.4 4.65
11 months 4.4 4.65
11 months 25 days 4.4 4.65
1 year 5.1 5.75
1 year 5 days 5.15 5.8
1 year 11days 5.2 5.85
1 year 25 days 5.2 5.85
13 months 5.1 5.75
14 months 5.1 5.75
15 months 5.1 5.75
16 months 5.1 5.75
17 months 5.1 5.75
18 months 5.25 5.9
2 years 5.4 6.05
30 months 5.4 6.05
3 years 5.4 6.05
5 years to 10 years 5.75 6.5
Source: Bank Website

Axis Bank Domestic Fixed Deposits Plus Interest Rates

Axis Bank Domestic Fixed Deposits Plus Interest Rates

Axis Bank has also revised its interest rates on domestic fixed deposits plus accounts and the new rates are in force from 26th November 2021. However, customers should note that this is a special kind of deposit and the bank does not allow premature withdrawal on these deposits.

Period RS. 5 Cr RS. 10 Cr RS. 25 Cr RS. 50 Cr Rs.100 Cr and above
7 days to 14 days 2.5 2.5 2.5 2.5 2.5
15 days to 29 days 2.5 2.5 2.5 2.5 2.5
30 days to 45 days 3 3 3 3 3
46 days to 60 days 3 3 3 3 3
61 days 3.25 3.25 3.25 3.25 3.25
3 months 3.65 3.65 3.65 3.65 3.65
4 months 3.65 3.65 3.65 3.65 3.8
5 months 3.65 3.65 3.65 3.65 3.8
6 months 4 4 4 4 4.15
7 months 4 4 4 4 4.15
8 months 4 4 4 4 4.15
9 months 4.15 4.15 4.15 4.15 4.25
10 months 4.15 4.15 4.15 4.15 4.25
11 months 4.15 4.15 4.15 4.15 4.25
11 months 25 days 4.15 4.15 4.15 4.15 4.25
1 year 4.5 4.5 4.5 4.5 4.6
1 year 5 days 4.5 4.5 4.5 4.5 4.6
1 year 11 days 4.5 4.5 4.5 4.5 4.6
1 year 25 days 4.5 4.5 4.5 4.5 4.6
13 months 4.5 4.5 4.5 4.5 4.6
14 months 4.5 4.5 4.5 4.5 4.6
15 months 4.5 4.5 4.5 4.5 4.6
16 months 4.5 4.5 4.5 4.5 4.6
17 months 4.5 4.5 4.5 4.5 4.6
18 Months 4.5 4.5 4.5 4.5 4.6
2 years 4.7 4.7 4.7 4.7 4.7
30 months 4.7 4.7 4.7 4.7 4.7
3 years 4.7 4.7 4.7 4.7 4.7
5 years to 10 years 4.7 4.7 4.7 4.7 4.7
Source: Bank Website

Axis Bank NRE Fixed Deposits

Axis Bank NRE Fixed Deposits

On Non-Resident External (NRE) deposits of less than Rs 2 Cr maturing in 1 year to less than 10 years, Axis Bank is promising the following interest rates w.e.f 01.11.2021.

Period Interest rates in % p.a.
1 year 5.1
1 year 5 days 5.15
1 year 11 days 5.2
1 year 25 days 5.2
13 months 5.1
14 months 5.1
15 months 5.1
16 months 5.1
17 months 5.1
18 Months 5.25
2 years 5.4
30 months 5.4
3 years 5.4
5 years to 10 years 5.75
Source: Bank Website

Axis Bank NRO Deposits

Axis Bank NRO Deposits

On Non-Resident Ordinary (NRO) deposits of less than Rs. 2 Cr maturing in 7 days to less than 10 years, Axis Bank is offering the below-listed rates w.e.f. 10.11.2021.

Period Interest rates in % p.a.
7 days to 14 days 2.5
15 days to 29 days 2.5
30 days to 45 days 3
46 days to 60 days 3
61 days 3
3 months 3.5
4 months 3.5
5 months 3.5
6 months 4.4
7 months 4.4
8 months 4.4
9 months 4.4
10 months 4.4
11 months 4.4
11 months 25 days 4.4
1 year 5.1
1 year 5 days 5.15
1 year 11 days 5.2
1 year 25 days 5.2
13 months 5.1
14 months 5.1
15 months 5.1
16 months 5.1
17 months 5.1
18 Months 5.25
2 years 5.4
30 months 5.4
3 years 5.4
5 years to 10 years 5.75
Source: Bank Website

Axis Bank NRI Fixed Deposit Plus Interest Rates

Axis Bank NRI Fixed Deposit Plus Interest Rates

On NRI Fixed Deposit Plus accounts where premature withdrawal is not allowed, Axis Bank is currently providing the following rate of interest w.e.f. 26.11.2021.

Period RS. 5 Cr RS. 10 Cr RS. 25 Cr RS. 50 Cr Rs.100 Cr and above
1 year 4.5 4.5 4.5 4.5 4.6
1 year 5 days 4.5 4.5 4.5 4.5 4.6
1 year 11 days 4.5 4.5 4.5 4.5 4.6
1 year 25 days 4.5 4.5 4.5 4.5 4.6
13 months 4.5 4.5 4.5 4.5 4.6
14 months 4.5 4.5 4.5 4.5 4.6
15 months 4.5 4.5 4.5 4.5 4.6
16 months 4.5 4.5 4.5 4.5 4.6
17 months 4.5 4.5 4.5 4.5 4.6
18 Months 4.5 4.5 4.5 4.5 4.6
2 years 4.7 4.7 4.7 4.7 4.7
30 months 4.7 4.7 4.7 4.7 4.7
3 years 4.7 4.7 4.7 4.7 4.7
5 years to 10 years 4.7 4.7 4.7 4.7 4.7
Source: Bank Website

Story first published: Saturday, November 27, 2021, 11:12 [IST]



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3 Mutual Fund SIPs Which Are Favourite Of Rating Agencies

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Canara Robeco Bluechip Equity Fund

This fund has been rated 5-star by Morning Star and Value Research and also has a No 1 rating from Crisil.

The fund has a solid track record of returns and a robust portfolio. For an SIP, the fund house has stipulated a small sum of Rs 1,000, which is very much affordable.

If investors had to start an SIP of Rs 10,000 each month, 36-months ago, the sum would have grown into Rs 5.34 lakh, against Rs 3.6 lakh invested.

Canara Robeco Bluechip Equity Fund had holdings in 48 companies under its portfolio, which includes names like ICICI Bank, Infosys, HDFC Bank, Reliance Industries etc.

While we do not like lumpsum investments in mutual funds, we definitely recommend investing by way of the SIP route. It tends to hedge risks as in case of a downward slide as investors can lap-up the units at lower prices.

Mirae Asset Large Cap Fund - Good fund for SIPs

Mirae Asset Large Cap Fund – Good fund for SIPs

This fund has been rated 5-star by CRISIL and Value Research. Again, like the above peer it has a good long-standing track record. This fund is essentially a large cap fund, which provides investors long term capital appreciation.

The 1-year returns from the fund has been 33%, while the 3-year returns has been 17.65% on annualized basis, while the 5-year returns has been 17.53%. The assets under management are a solid Rs 30,000 crores. The fund is almost fully invested in equities and barely has any cash or equivalent holdings, which is not beneficial when the markets are falling.

The fund has holdings in stocks of ICICI Bank, Infosys, HDFC Bank, Reliance Industries etc. All of the stocks are index heavyweights and if the indices jump, the net asset value of the fund would jump.

Axis Bluechip Fund - Solid returns from SIPs

Axis Bluechip Fund – Solid returns from SIPs

Axis Bluechip Fund has been rated 5-star by Value Research and also 5-star by Morningstar. The fund has generated returns of 28.45% in 1-year, while the 5-year returns has been 17.19% on an annualized basis.

The assets under management of the fund is Rs 33,000 crores. The fund has holdings in stocks like Bajaj Finance, ICICI Bank, HDFC Bank, Infosys and Avenue Supermarts.

An SIP investment of Rs 10,000 each month for the last 36-month would have translated into returns of Rs 5.2 lakhs, against an investment of Rs 3.6 lakhs. We believe that the stock markets are overvalued at these levels and hence even SIPs have to be considered only in small amounts. If there is a sudden collapse in the markets, then one can invest larger sums, or else one should stick to very small amounts.

Disclaimer

Disclaimer

Investing in mutual funds is risky, especially equity mutual funds. Investors must therefore exercise due caution. Greynium Information Technologies, the author, are not liable for any losses caused as a result of decisions based on the article.



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“BUY” This Large Cap Retail Stock With A Target Price of Rs. 340: Emkay Global

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The brokerage’s take on Aditya Birla Fashion & Retail Ltd.

Emkay Global has commented in its research report that “In terms of Q2 recovery, we note that ABFRL led the pack with an impressive per-store recovery of ~110% for Lifestyle business vs. 70-80% recovery for peers. Recovery in Pantaloons has also been strong at ~100% in the festive season, with the opening up of malls and upbeat consumer sentiment.

According to the brokerage’s research report “ABFRL’s overall growth in Q2 was impacted by the weak wholesale channel due to lower stocking by MBO/LFS. In our view, recovery in this channel, coupled with strong festive demand, can boost growth in H2. Store additions were muted in H1 vs. 5-10% network expansion seen by V-Mart/Trent. The slower additions were due to operating challenges and ongoing renovations for Pantaloons. However, store additions are expected to pick up with ~100 stores for Ethnic in the next 12 months and ~60/250 net-new additions for Pantaloons/Lifestyle in FY22. Overall CAPEX is expected to be in the range of Rs4bn.”

The brokerage has also claimed that the company’s “Ethnic and innerwear account for ~40% of India’s apparel industry (USD67bn in FY20). In our view, with these new segments, ABFRL now has the most diversified portfolio among peers, addressing 75-80% of the overall apparel opportunity. The growth opportunity in the Ethnic category is yet to play out. Management has robust growth plans in this space, which can surprise ahead.”

Buy Aditya Birla Fashion & Retail Ltd. With A Target Price of Rs. 340

Buy Aditya Birla Fashion & Retail Ltd. With A Target Price of Rs. 340

According to the brokerage’s call “Strong demand trends, aggressive portfolio/store expansion and improving efficiencies keep us positive. After the recent 10% correction, valuations at ~25x Dec’23E pre-IndAS EBITDA are at a discount to peers. Further, the expansion into Tier-2/3/4 cities with Pantaloons/PE-Red/AS-Prime and traction in the Ethnic category should help sustain high-teen earnings growth well beyond FY24. Reiterate Buy with a TP of Rs340 (30x Dec’23E pre-IndAS EBITDA). The emergence of a third Covid wave remains a key risk to our estimates.”

Disclaimer

Disclaimer

The stock has been picked from the brokerage report of Emkay Global Financial Services Limited. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.



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WhatsApp wins approval to double payments offering to 40 million users in India

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WhatsApp has won regulatory approval to double the number of users on its payments service in India to 40 million, a source with direct knowledge told Reuters on Friday.

The company had requested that there should be no cap on users of its payment service in India.

Instead, the National Payments Corporation of India(NPCI)this week told the company it could double the user base to which it can offer its payment service – currently restricted to 20 million.

WhatsApp is owned by Facebook, which recently changed its name to Meta.

The source said the new cap would still hinder the company’s growth prospects given that WhatsApp’s messenger service has more than 500 million users in India, the company’s biggest market.

It was not clear when the new cap would come into effect.

WhatsApp did not immediately respond to a request for comment, while the NPCI declined to comment.

WhatsApp competes with Alphabet Inc’s Google Pay,SoftBank- and Ant Group-backed Paytm and Walmart’sPhonePe in India’s crowded digital market.

The NPCI gave WhatsApp approval to start its payments service last year after the company spent years trying to comply with Indian regulations, including data storage norms that require all payments-related data to be stored locally.

WhatsApp has almost reached its user base of 20 million for payment services, said the source, who declined to be identified as the details are private.

Online transactions, lending and e-wallet services have been growing rapidly in India, led by a government push to make the country’s cash-loving merchants and consumers adopt digital payments

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‘Buy’ This Stock For +24% Returns In 6 Months: HDFC Securities

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Target Price

The Current Market Price (CMP) of Precision Camshafts Ltd. is Rs. 135.25 The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 168. Hence the stock is expected to give a 24.21% return, in a Target Period of 6 months.

Stock Outlook
Current Market Price (CMP) Rs. 135.25
Target Price Rs. 168
1 year returns 24.21%

Company performance

Company performance

The company’s consolidated revenue increased by 17% YoY to Rs. 215 crore driven by higher realization. EBITDA increased 56% YoY on account of lower raw material expenses, while EBITDA margins expanded ~340bps to 13.7%. The company reported a PAT of Rs. 20 crore, against Rs. 10 crore in Q2FY21. Precision Camshafts Ltd. reported that its revenue from European operation increased 11% YoY to Rs. 117 crore, while domestic revenue grew 37/22% YoY/QoQ to Rs. 70 crore.

Comments by HDFC Securities

Comments by HDFC Securities

According to HDFC Securities, “The performance of Precision Camshaft Ltd (PCL) was impacted over the last few years due to a global slowdown in the automobile industry which was further complicated by Covid related disruption. The global recovery in automobile demand and improving the performance of its subsidiary companies augur well for future growth.”

About the company

About the company

The Precision Group is at the forefront of the automotive components business. The company has made strides towards participating in the EV opportunity by acquiring Emoss. The company offers high-end battery systems, fuel cells, range extenders, generators, power electronics, and control systems suitable for different industries. Acquisition of MFT, a specialist in machined components has resulted in broadening PCL’s product portfolio and has given access to developed markets of Europe and North America.

Disclaimer

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.



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Stock to Buy For A 40% Upside, Following This Week’s Market Crash

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Zensar – a good long term stock buy

Current market price Rs 423
Target price Rs 600
Gains 41.82%

Zensar helps to design, deliver, and grow digital products, services, and experiences to transform business. It also provides businesses speed and advancement with its cloud-native, full-stack, and data-driven practice. It also provides data Engineering and analytics strategies.

Zensar reported a strong 2QFY22 with a USD constant currency revenue growth of 12.3% QoQ and organic constant currency growth of 6.4% QoQ, ahead of Motilal Oswal’s estimate. EBIT margin declined by 300bp QoQ to 10.9% due to a salary hike and other supply-related factors. Deal TCV witnessed a strong recovery to USD188.5m (v/s USD97mn in 1QFY22), implying a book-to-bill ratio of 1.3 times.

Management commentary remains optimistic

Management commentary remains optimistic

According to the management of the company as highlighted by the Motilal Oswal report, growth was broad based across verticals. Its largest vertical – Hi-Tech and Manufacturing – has three sub-verticals of Hi-Tech, Manufacturing, and Emerging. The management has re-designed the vertical in terms of strategy and new offerings. The new operating structure is ready, and there will be an additional leadership team onboarding in 3QFY22.

The management expects the growth momentum to continue. However, 3QFY22 would have a seasonal impact from furloughs. The City of San Diego deal has been partially ramped up in 2Q and will witness a full ramp up in 3QFY22.

Valuation and view of Zensar

Valuation and view of Zensar

According to Motilal Oswal, the current valuation of 20x FY23E EPS is one of the lowest in its midcap coverage and is at a discount of 45% to its peer median valuation.

The brokerage expects revenue growth momentum to continue in 2HFY22 and FY23. “The new CEO led leadership team is in place and its growth strategy has delivered results. We expect sustained traction, despite margin falling to mid teen levels. The management expects margin to revert to high teens in the medium term. With a likely return to high-teens organic growth in FY23E (we estimate 19% YoY) on a good FY22 exit and a recovery in key accounts, we see potential for a significant stock re-rating as valuations catch up with its peer group,” Motilal Oswal has said.

Shares of Zensar was last seen trading at Rs 423 on the NSE.

Just a word of caution to our readers. While we do recommend stocks from brokerage reports, markets at these times are highly volatile due to detection of the new Covid variant ‘Omicron. Therefore, it is prudent not too invest lumpsum amounts at current stage.

Disclaimer

Disclaimer

The stock of Zensar has been picked from the brokerage report of Motilal Oswal Financial Services. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.



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