Release Date: April 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Zensar Technologies Ltd (BOM:504067, Financial) reported a year-over-year revenue growth of 5.1% in constant currency terms for FY25.
- The company achieved a gross margin of 30.3% in Q4 FY25, with a sequential growth of 20 basis points.
- Order book stood at $213.5 million, marking a year-over-year growth of 17.6%, and this is the third consecutive quarter with an order book exceeding $200 million.
- Voluntary attrition reduced to 9.9% in Q4, the lowest in recent years, indicating improved employee retention.
- The Board of Directors recommended a final dividend of INR11 per share for FY25, reflecting a significant increase in the dividend payout ratio to 40%-50% of consolidated profits.
Negative Points
- Revenue growth in healthcare, manufacturing, and consumer services sectors witnessed declines of 1.4% and 2.6%, respectively, in constant currency terms.
- The company is facing geopolitical uncertainties and cautious client sentiment, which could impact future growth.
- There is a noted rightward shift in demand, indicating potential delays in client decision-making and project commencements.
- The macroeconomic environment remains uncertain, with potential impacts from tariffs and other geopolitical factors.
- Despite strong order bookings, the company acknowledges that the competitive intensity may increase if demand compresses further.
Q & A Highlights
Q: Given the volatile macro environment and potential tariff impacts, are you concerned about growth entering FY 2026?
A: Manish Tandon, CEO, stated that while there is uncertainty, the order book should help navigate challenges. The exposure to manufacturing and automotive is limited, and healthcare and life sciences are relatively price inelastic, which should mitigate some risks.
Q: Is the aspiration to grow at double digits still intact despite increased macro headwinds?
A: Manish Tandon, CEO, affirmed that the aspiration remains unchanged, although realistic expectations might need adjustment based on the evolving environment.
Q: How do you view margin visibility entering FY26, considering potential headwinds like ESOP costs?
A: Pulkit Bhandari, CFO, indicated that they aim to maintain mid-teens margins, including ESOP costs, and expect improvements later in the year.
Q: Can you provide insights into the deal pipeline and its impact on future growth?
A: Manish Tandon, CEO, noted that while there is some rightward shift in demand, the pipeline remains strong. The focus is on executing well and adapting to changes in the macro environment.
Q: What is the outlook for large deals in FY26 compared to FY25?
A: Manish Tandon, CEO, expressed optimism for better large deal closures in FY26, with a strong pipeline for creating large deals, although the RFP-driven pipeline remains muted.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
