Release Date: July 22, 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 sequential Q-o-Q revenue growth of 3.3% in reported currency and 1.9% in constant currency, with notable growth in telecom, media, and technology (5.5%) and healthcare (5.2%).
- The company has successfully integrated artificial intelligence into its strategy, with AI driving 30% of its active pipeline and 20% of its order bookings.
- Zensar Technologies Ltd (BOM:504067) has improved its LTM attrition rate to 9.8%, indicating better employee retention.
- The company announced salary hikes for all employees effective July 1, setting it apart from some industry peers.
- Zensar Technologies Ltd (BOM:504067) has a healthy order book of $172 million, reflecting an 11.7% growth year-over-year, with an increasing average tenure of engagements.
Negative Points
- The macroeconomic environment remains challenging, with growth slowing in both the US and Europe, impacting client budgets and new spending.
- EBITDA for the quarter dropped by 40 basis points to 15.2% due to increased investment in sales, marketing, and travel expenses.
- The manufacturing and consumer services sectors experienced a decline of 4.1%, reflecting challenges in these verticals.
- Zensar Technologies Ltd (BOM:504067) anticipates macro-driven variability in client budgets, which could impact future growth.
- The company faces potential margin pressures in the coming quarters due to salary hikes and the potential implementation of an ESOP plan.
Q & A Highlights
Q: Do you believe the headwinds on Telecom, Media, and Technology (TMT) are largely behind us, and how do you see the Manufacturing and Consumer Services (MCS) sector going forward?
A: Manish Tandon, CEO, stated that while the worst may be behind for TMT, consistent growth is uncertain due to ongoing industry challenges. For MCS, after a strong Q3 last year, the sector has been slightly muted, but growth is projected for Q2.
Q: How does the pipeline look, and can it return to the $200 million range?
A: Manish Tandon mentioned that while there is uncertainty affecting the pipeline, there has been a 12% year-over-year growth in order bookings, which is a positive sign. However, market uncertainty continues to impact the pipeline.
Q: How should we think about margins going forward, considering salary hikes and other costs?
A: Pulkit Bhandari, CFO, explained that salary hikes will impact margins, and the ESOP plan is still under consideration. These factors will affect margins, but the company aims to maintain mid-teen margin guidance.
Q: Can you provide insights into the impact of AI on your business and pipeline?
A: Manish Tandon highlighted that AI is central to their strategy, with 30% of the active pipeline being AI-driven. The company is focused on engineering change with AI and has made significant investments in AI capabilities.
Q: What is the outlook for the Manufacturing and Consumer verticals, and how is the Africa region performing?
A: Manish Tandon projected growth in the Manufacturing and Consumer verticals for Q2, despite tariff impacts. In Africa, strategic investments and leadership changes are expected to show results in the coming quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
