Zensar Technologies Ltd (ZENSARTECH) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, you are connected for Zensar Technologies Limited Q2 FY '27 earnings conference call. Please stay connected, the conference will begin shortly.
Moderator: Ladies and gentlemen, good day, and welcome to the Zensar Technologies Limited Q2 FY '27 Earnings Conference Call hosted by HDFC Securities. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Chandra from HDFC Securities. Thank you, and over to you, sir.
Amit Chandra (HDFC Securities): Yeah. Yeah, thank you, operator. Good morning, everyone. On behalf of HDFC Securities, I welcome you all
Amit Chandra (HDFC Securities): Zensar Technologies Q2 FY'27 earnings call. We have with us Mr. Manish Tandon, CEO and Managing Director, Mr. Pulkit, Mr. Pulkit Bhandari, Chief Financial Officer, and a few other members from the senior management team. Before I, before I hand over the call to the, you know, before I, I hand over the call to Manish, I would like to highlight that the safe harbor statement of the second slide of the earnings presentation is assumed to be read and understood. Thank you, and over to you Manish.
Manish Tandon (Zensar Technologies Ltd): Thank you Amit, and hello, good morning, afternoon, evening, everyone. Thank you all for taking the time to join us today, to discuss Zensar's financial results for the second quarter of FY '26-'27. With me on this call are my colleagues Pulkit Bhandari, Vijay Sinha, and Vivek. During Q2 of FY '27, macro conditions remain broadly unchanged and clients stayed measured in their spend and long-term commitments. Clients that committed spend directed it towards embedding AI into their core operations, focusing much sharply on service quality, simpler processes, and measurable returns really. This quarter we made meaningful progress in our AI journey, building on our Zensai suite. We have moved from proof of value to production-scale adoption with several clients, and AI-influenced deals now account for 36% of our order book. Our AI-native transformation capabilities also earned external validation this quarter through multiple industry awards and favorable positioning in analyst assessments. We continue to build on this foundation by introducing new AI-native offerings, deepening our partnerships across AI ecosystem, and expanding our pool of AI-certified talent. Together, these strengthen our ability to help clients adopt AI at scale and support sustainable growth for Zensar while maintaining high standards of governance, security, and enterprise-grade control. Turning to our financial performance, the company delivered a strong financial performance for this quarter, registering a revenue of $166.2 million, representing a sequential quarter-on-quarter growth of 4.1% in constant currency. In INR terms, this equates to a sequential quarter growth of 5.1% and year-over-year growth of 11.5%. Within our markets, three out of four verticals showed sequential constant currency growth. Revenue rose by 7.1% in banking, financial services, and insurance, 2.4% in healthcare and life sciences, and 2.9% in manufacturing and consumer services. Telecommunication, Media, and Technology declined by 2 2.2%. More importantly, all our regions grew sequentially on the back of widespread volume growth. Beyond revenue, our operational metrics underscore the strength of our execution. Our EBITDA margin sequentially improved by 120 basis points to 15.8%. Zensar crossed the 12,000 headcount mark, an 8.6% quarter-on-quarter increase. Our $20 million-plus accounts grew by one, and $5 million-plus accounts grew by two. Utilization improved to 87.6%, up 250 basis points sequentially, while voluntary attrition remained an industry-leading low at 9.3%. Together, these metrics reflect our disciplined operational focus, enriching talent culture, and continued progress against our strategic priorities as we position the business for sustainable long-term growth. With that, I will now invite Pulkit to provide an update on critical financial metrics.
Pulkit Bhandari (Zensar Technologies Ltd): Thank you, Manish. Good day, everyone. Thank you all for joining this call. I will take you through some of the key business and financial metrics for the quarter ending September '26. Enterprise-wide AI transformation is redefining our industry. While the demand environment remains measured and clients are seeking outcome-based engagements, enterprise AI is enterprise AI spending is entering a scale-up phase. Our investments in AI, cyber security, and domain capabilities position us well to capture this shift in decision cycles as decision cycles normalize. We believe the next phase of growth will favor organizations that can pivot seamlessly into newer trends, combine AI capabilities, domain expertise, and secure execution
Pulkit Bhandari (Zensar Technologies Ltd): The reported revenue for the quarter of financial year 27 stood at 1 166.2 million in USD terms, reflecting a growth of 4.1% sequentially in constant currency terms. In reported terms sequentially it grew by 4.2 by 4.2%. Our EBITDA this quarter expanded by 120 bps sequentially driven by positive forex impact of 0.4%, increase in volume, working days and utilization by plus 1.3%, lower ESOP related costs by plus 1.3%, offset by reversal of management bonuses in previous quarters -1.3%, other dilution in margin -0.5%, primarily due to increase in AMCs and software related cost and reduction in offshore revenue mix. Our PAT margin for the quarter stood at 12%, contracted by 20 bps. Some other key highlights. We are planning for annual wage hike in two batches effective Q3 and Q4 of this fiscal. Order book stood at 151.5 million for the quarter. Our DSO increased to 77 days. We are seeing pressure in this as payment terms are getting renegotiated across the industry. Cash including investments stood at 297.3 million after a dividend pay out of 29.9 million. ETR for the quarter is 24.5%. Diluted EPS EPS for the quarter stood at 8.3 per share which is 3.6% growth quarter-on-quarter. With that I will now invite Vijay, our chief operating officer to comment further on Q2 FY '27 results.
Vijay Sinha (Zensar Technologies Ltd): Thank you, Manish and Pulkit. Greetings, everyone. I will share details about our operational efficacy, service line performance and AI journey. Our utilization for the quarter stood at 87.6%, which is an improvement of 250 basis points quarter-on-quarter. The rigor associated with accelerated fulfillment and capability enrichment picked up a significant momentum in Q2 of FY '27. We had a net addition of 978 employees in the quarter, which is 73% higher than the previous quarter. Our voluntary attrition was 9.3%. This is the seventh successive quarter where our voluntary attrition has been below the 10% mark. The offerings from our service lines and industry services groups continue to resonate well with our clients. The share of revenues from our service lines increased to 72.2%, which is an improvement of 420 basis points YoY. On a YoY basis, products and platforms, including CMO services, grew by 18.3%. Data engineering and analytics grew by 13.4%, Enterprise Application Services grew by 1.8%, Cloud Infrastructure and Security Services declined by 0.6%. We continue to deliver significant value to our clients by leveraging our pragmatic and trusted AI offerings. Our transformation into becoming an AI-native organization has gained further momentum. Key progress made across the five dimensions of our AI-native transformation are as follows. On the people capability uplift dimension, 92% of our people are making rapid progress across the four-level competency ladder administered by our Ignite AI Academy. On the service delivery dimension, we are pivoting from SDLC-based execution to AIDLC-based execution methodology. 59 plus percent of our projects have already adopted the AIDLC ways of working. Our ZenAI platform continues to be enriched. Multiple clients are leveraging the platform and the underlying framework to accelerate their own AI transformation journey. On the horizontal offerings dimension, every service line is reimagining its offerings to leverage the power of AI. We have 50 plus new AI-based offerings across our five service lines. Our industry domain and service line experts continue to collaborate to build industry-specific AI solutions. We have 50 plus solutions that address various aspects of the business value chain of our client base. With that, we now open the line for questions.
Moderator: Thank you very much. We will now begin with a question and answer session. Anyone who wishes to ask a question, may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will
Moderator: And while the question queue assembles, the first question is from the line of Amit Chandra from HDFC Securities. Please go ahead. Yeah, thanks for the opportunity.
Amit Chandra (HDFC Securities): So, my first question is you know, on the overall growth. So we have seen very healthy recovery in terms of sequential growth in this quarter. So, you know, mostly it was you know, it was it was a, you know, like a broad-based growth. But you know, BFSI, which is like powering this growth, which is now 50% of our overall revenues, and you know, there is a large deal there. So, how to see the, you know, continuation of the growth, because we were expecting BFSI you know, in terms of the large deal to, you know, to become steady state in quarter three. So, we are already there in terms of steady state, or still we can see some more uptick in the BFSI? And apart from that, in the second half, how how do you see the, you know, vertical-wise performance and the overall, you know, company growth like panning out? Especially when you mentioned that the, you know, overall macro conditions were not that you know, conducive. And also, in terms of the TCV number, obviously, we have seen the growth you know, recovery, but if I see the TCV on the first half also, it is down by around 9% YoY, and in terms of TTM adjusting for the last deal, it's you know, down YoY. So, you know, in in line with how we're seeing the TCV number. So, you know, what is the kind of you know, confidence in terms of growth for the second half?
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