Edison Investment Research Initiates Coverage on Zalaris - Spotlight on HR and Payroll Solutions

On March 13, 2024, Edison Investment Research Limited announced its initiation on Zalaris (ZAL), recognizing the company as a key player in the European market for comprehensive payroll and HR solutions. Zalaris is distinguished by its proprietary platform, PeopleHub, which is designed for multinational corporations and complex single-country projects within the business process outsourcing (BPO) market. The company has demonstrated a strong financial profile marked by good revenue momentum and a stable churn rate, paving the way for long-term customer relationships and a significant portion of recurring revenues.

The report highlights Zalaris's potential for growth through both contract renewals with existing customers and new business acquisitions, especially in regions where the company's presence is not yet fully capitalized relative to the market size. Edison's valuation of the company, based on a discounted cash flow (DCF) model, points towards a conservative yet optimistic outlook for mid-term growth and profitability. The valuation of NOK87.1 per share suggests there is considerable upside from the current share price, underlining the investment potential in Zalaris. The company's focus on margin initiatives is also expected to further enhance cash generation and returns for stakeholders.