Fidelity Research bullish on Zensar Technologies

Fidelity Management And Research Company seems to be very bullish on Zensar Technologies, a pune based midcap IT company, and has quietly increased its stake in the company from 0% on 31st March 2010 to 4.62% (~2 million Shares) as on 31st DEC 2010 based on the shareholding pattern declared by the company on the National Stock Exchange official website. The latest share holding pattern of the Zensar Technologies as on 31DEC 2010 is summarized below:

Sr No	Shareholder	Number of shares	% of total shareholding
1	Promoter group	20620404	47.64%
2	Mutual Funds	1005310	2.32%
3	FIIs including Fidelity	2785281	6.43%
4	Electra Partners Mauritius Ltd	10301294	23.80%
5	Ganesh Natrajan	557058	1.29%
TOTAL			81.48%

Around 82% of the shares of the Company is locked among the promoters and institutional investors. Free float in the stock is very low and ownership among public is shallow. Any good news in terms of company performance might create significant demand for its shares and because of low liquidity the stock price might appreciate very fast in very short span of time.

On valuation metrics as well the company is tremendously undervalued. At the current Market price of 180 the stock is available at a PE multiple of just 6 times based on the current year EPS of Rs. 30/- and around 5 times based on the expected EPS of around Rs 35/- in FY-12. The expected financial performace of the company is summarized below:

Parameter	FY-11	FY-12	FY-13
Sales	1150	1600	1800
PAT	130	150	180
EPS	30	35	42
PE	6	5.14	4.28