ZENSARTECH Q2 FY26 earnings call.
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Revenue
₹1,421 Cr
verified against source
Revenue YoY
4.2%
reported change
EBITDA
Pending
latest reported figure
Source
screener in enriched
record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
Zensar Technologies reported Q2 FY26 revenue of $162.8 million, growing 4.2% YoY (3.4% CC) with flat sequential growth. EBITDA margin expanded 20bps QoQ to 15.4% despite absorbing ~$3.2 million salary hike impact—offset by improved utilization (84.8%, +200bps YoY), better offshore mix, and cost controls. PAT margin stood at 12.8%. AI-influenced order bookings reached 28%, up from 21% in Q1. TMT vertical declined 9.9% QoQ due to secular capex-vs-opex rationalization trend as clients shift spending toward GPUs and AI; management confirmed this is a structural headwind with no quick resolution. BFS (+6%) and Healthcare (+3.9%) drove growth while TMT (now 20% of revenue, down from 27.1% in FY24) remains under pressure. Book-to-bill was 0.97x with $158.7 million order book; H1 FY26 B2B stands at 1.02x. Management flagged Q3 typically sees furlough impact but expects reduced impact given lower TMT exposure. The quarter missed management's own double-digit growth aspiration; NASSCOM revised industry growth estimates downward, surprising the CEO. No specific revenue or margin guidance provided—mid-teens EBITDA margin remains the planning framework. Key risks include TMT secular decline potentially accelerating, deal conversion timing uncertainty, and AI productivity benefits accruing primarily to clients rather than Zensar.
Colored figures show movement against the previous available record.
Guidance to track
- Management committed to maintaining margins within mid-teens range, balancing investments in people and capabilities against cost discipline. Each quarter may see fluctuations but overall profile guidance remains unchanged.
- First half B2B of 1.02x indicates sustainable business momentum. Management not unduly worried despite Q2 being a low renewal quarter with some deal slippage due to tariff uncertainty.
- Over 5,000 employees deepened AI/GenAI/agentic AI skills via multi-tiered learning journeys; intensified focus on leadership proficiency in emerging AI areas.
- TMT share has declined from 27.1% (FY24) to 20% as management reduces exposure through natural attrition rather than aggressive exit, while focusing growth on BFS, Healthcare, and MCS.
Risks flagged
- CEO explicitly stated clients in TMT are cutting opex to fund capex/GPU investments—'you can have either GPUs or people, not both.' Multiple large-scale layoffs announced by clients suggest ongoing headcount rationalization. Management cannot predict when this trend reverses.
- Book-to-bill of 0.97x in Q2 was among lowest in 11 quarters. H2 revenue requirement of ~$220 million to achieve flat TCV looks challenging. Management attributed Q2 weakness to 'Liberation Day' tariff uncertainty causing deal shifts, but no confirmed timeline for closures.
- When asked about AI margin benefits, CEO stated 'we are using it more as a competitive lever rather than a productivity edge.' Examples cited (25% faster time-to-market, 40% workload reduction, 70% cost efficiency) appear client value-capture, not Zensar margin improvement.
- When pressed on whether FY26 will be better than FY25, CEO said 'I don't want to comment on future' and directed analysts to make their own estimates. Previously aspired for double-digit growth—now seems quietly walked back given industry-wide guidance cuts.
Key quotes
- You can have either GPUs or people, not both. We are seeing that a lot of opex is being rationalized in the TMT space to spend on capex-related things and we don't see this trend going away in a hurry unfortunately.
- I am paranoid about everything but this [low book-to-bill] is not something that I'm really worried about primarily because I think the pipeline that we are dealing with is pretty good. It's a question of being able to convert a couple of them quickly.
- Any AI related discretionary spend is very welcome by clients. Any non-AI related discretionary trend is a tough call because as you know with Liberation Day tariffs and things changing every day there are enough and more uncertainties. As far as AI is concerned, it's open season for discretionary projects.
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