ZENSARTECH - Zensar Technologies Ltd. Share Price

In the Q2 FY26 earnings call held on October 31, 2025, Zensar Technologies reported a revenue of $162.8 million, reflecting a year-over-year growth of 4.2% in reported currency and 3.4% in constant currency. The management noted a sequential growth of 0.5% in reported currency for the quarter. However, challenges remained in the Telecommunication, Media, and Technology (TMT) sector, which saw a decline of 9.9%.

Management expressed confidence in the overall business outlook despite these challenges, stating that their exposure to TMT had been decreasing, thus minimizing potential impacts going forward. They highlighted strong performance in Banking and Financial Services with a 5.6% increase and 3.9% growth in Healthcare and Life Sciences. The company launched the ZenseAI platform to enhance AI capabilities, with 28% of order bookings this quarter being AI-influenced, up from 21% in the previous quarter.

Key forward-looking points provided by management:

1. Revenue Target: The company aims for double-digit growth in FY26, with a robust pipeline for the next quarters, especially in sectors where they are performing well.
2. Gross Profit Improvement: Gross profits rose to 31.0%, showing a sequential growth of 50 basis points, along with an EBITDA of 15.4%.
3. Attrition Rate: The voluntary attrition rate remained stable at 9.8%, indicating good employee retention amidst challenges.
4. Investment in AI: Significant focus on enhancing AI capabilities, with over 5,000 employees engaged in AI training over the last four months.

Overall, while quarter results reflected some challenges, management's strategic focus on AI integration and decreasing reliance on TMT provide a cautiously optimistic future outlook.

Q&A from Zensar Technologies Q2 FY'26 Earnings Call

Question 1: "Could you give us some context on the challenges in the TMT vertical and do you think this has bottomed out?"

Answer: "We're witnessing a secular trend in TMT with clients shifting focus from OpEx to CapEx, leading to reduced spending. Some clients are rationalizing their workforce, which doesn't help. Fortunately, our exposure to TMT has decreased, minimizing the impact on us relative to others with higher exposure."

Question 2: "What do you think will drive consolidated double-digit growth for us?"

Answer: "Aside from TMT, I'm optimistic about our pipeline, which is one of the strongest we've had historically, including significant large deals. Our execution focus means we can convert these opportunities in the upcoming quarters, setting a positive tone moving forward."

Question 3: "What about the deal wins? Do you think we'll see a bounce back?"

Answer: "I believe it's just a timing issue. Some deals were pushed to the next quarter due to market uncertainties. Historically, the quarter is quiet on renewals, but I see good traction on our existing bookings, indicating a potential rebound soon."

Question 4: "Are you worried about the low book-to-bill ratio?"

Answer: "I'm not overly concerned, as the pipeline looks solid, and we have promising engagement opportunities. The TMT headwind did impact results, but I remain confident about our future performance based on promising new opportunities."

Question 5: "What is your outlook for Q3 regarding furloughs?"

Answer: "Q3 generally experiences furlough impacts, and while this will affect us, our reduced exposure to TMT means we'll likely face lesser challenges compared to past downturns in this vertical. Overall, I don't anticipate significant disruptions."

Question 6: "Can you discuss performance in the Hi-Tech vertical and its broad-based impact?"

Answer: "The decline isn't client-specific; rather, it reflects a broader trend in technology investments prioritizing CapEx. Therefore, it's not about one or two clients; the entire sector is rationalizing spend. We're seeing growth in other verticals like BFSI and Healthcare."

Question 7: "What proportion of the workforce relies on H1B visas now?"

Answer: "We are not heavily dependent on H1B visas, with less than 3% of our workforce utilizing them. Our hiring strategy has focused on local talent for some time, minimizing risks associated with visa regulations."

Question 8: "What trends are you seeing in discretionary spending among clients?"

Answer: "AI-related discretionary spending is welcomed, while non-AI discretionary spend is viewed cautiously due to market uncertainties. Clients are more inclined to invest in AI projects as a way to drive productivity improvements."

Question 9: "How is ZenseAI being adopted and is it moving beyond pilot stages?"

Answer: "We are seeing strong traction with ZenseAI, where many clients are leveraging industry-specific agents for various applications. Moreover, 28% of our bookings this quarter were AI-influenced, indicating solid momentum in scaling AI within client operations."

These answers maintain focus on numbers and strategic insights while summarizing key takeaways from the earnings call.