ZENSARTECH - Zensar Tech.

📊 NSE: ZENSARTECH 🏢 Computers - Software - Medium / Small 📅 Last Updated: 12/14/2025 15:23

💰 Financial Performance

Revenue Growth by Segment

Digital and Application Services grew 5.6% YoY to INR 4,226.9 Cr in FY2025, while Digital Foundation Services grew 17.1% YoY to INR 1,053.7 Cr. Total revenue reached INR 5,280.6 Cr, a 7.7% increase from INR 4,901.9 Cr in FY2024.

Geographic Revenue Split

The United States contributed 67.7% (INR 3,576.2 Cr), Europe 20.9% (INR 1,103.6 Cr), and the Rest of the World/Africa 11.4% (INR 600.8 Cr) in FY2025.

Profitability Margins

Operating Profit Margin (OPM) moderated to 15.5% in FY2025 from 17.8% in FY2024, a decline of 230 bps due to higher sales, marketing, and travel expenses. PAT margin was 12.3% in FY2025 compared to 13.6% in FY2024.

EBITDA Margin

EBITDA margin stood at 15.5% in FY2025. Absolute EBITDA was INR 816.7 Cr, representing a 6.3% YoY decline from INR 871.7 Cr in FY2024 due to increased investments in new technologies.

Capital Expenditure

Not disclosed in absolute INR Cr for future periods, but the company maintains a debt-free status (excluding lease liabilities) and held cash and investments of $293.0 million (approx. INR 2,450 Cr) as of Q2 FY2026 to fund potential inorganic growth.

Credit Rating & Borrowing

Reaffirmed [ICRA]AA+ (Stable) and [ICRA]A1+ in September 2025. Borrowing costs are minimal as the company is debt-free (excluding lease liabilities) with an interest coverage ratio of 41.7x in FY2024.

⚙️ Operational Drivers

Raw Materials

As an IT services firm, the primary 'raw material' is human capital. Employee benefit expenses are the largest cost component, though specific percentage of total cost was not disclosed.

Import Sources

Not applicable for IT services; talent is sourced globally with 10,620 associates across 16 countries.

Key Suppliers

Not applicable for IT services.

Capacity Expansion

Current workforce stands at 10,620 associates as of June 30, 2025. Expansion is driven by headcount growth and utilization, which improved in FY2025.

Raw Material Costs

Wage cost inflation significantly impacted margins in FY2023, reducing OPM to 11.4%. Stabilization of wage costs in FY2024 helped margins recover to 17.8%.

Manufacturing Efficiency

Employee utilization levels improved in FY2025 and Q1 FY2026, supporting the business profile despite industry-wide demand softening.

Logistics & Distribution

Not applicable for IT services.

📈 Strategic Growth

Expected Growth Rate

Growth Strategy

Growth will be achieved through AI-led innovation, with 30% of the active order pipeline already driven by AI. The company launched ZenseAI, an agentic AI platform, to drive enterprise intelligence. Additionally, Zensar is scouting for inorganic growth opportunities using its $293 million cash reserve and focusing on the BFSI vertical, which supported a TCV of $774 million for FY2026.

Products & Services

IT consulting, application development and maintenance, package implementation, BPO operations, Digital Foundation Services, and the ZenseAI agentic AI platform.

Brand Portfolio

Zensar, ZenseAI.

New Products/Services

ZenseAI agentic AI platform launched in 2025 to drive enterprise-level innovation.

Market Expansion

Focusing on deepening penetration in the healthcare and life sciences vertical and expanding presence in the US, UK, Europe, and South Africa.

Market Share & Ranking

Moderate scale compared to large domestic IT players, which restricts pricing flexibility and margins.

🌍 External Factors

Industry Trends

The IT industry is shifting toward AI-integrated services and cloud infrastructure. Zensar is positioning itself with a 30% AI-led pipeline and the ZenseAI platform to capture this shift.

Competitive Landscape

Intense competition from prominent global and domestic IT players leads to pricing pressure and high competition for skilled talent.

Competitive Moat

Moat is based on an established business position and backing from the RPG Group. However, the lack of large-scale operations makes the moat less sustainable against Tier-1 competitors who have better pricing power.

Macro Economic Sensitivity

Highly sensitive to US and European GDP growth and corporate discretionary spending; 88.6% of revenue is derived from these two regions.

Consumer Behavior

Clients are increasingly demanding AI-led intelligence and cost-effective digital foundation services, reflected in the 17.1% growth of Zensar's Digital Foundation segment.

Geopolitical Risks

Exposed to macroeconomic uncertainties and adverse regulatory/legislative changes, including potential US tariffs and changes in visa policies.

⚖️ Regulatory & Governance

Industry Regulations

Subject to data privacy regulations and labor laws in 16 countries. Changes in US work visa policies or data protection laws could increase compliance costs.

Environmental Compliance

Direct exposure to environmental risks is not material given the service-oriented nature of the business.

Taxation Policy Impact

Not disclosed; however, fiscal policies in the US and Europe regarding IT outsourcing are key monitors.

Legal Contingencies

Faces risks of data breaches and cyberattacks which could result in substantive liabilities, fines, or penalties. No specific pending court case values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

Softening demand in the US market and potential decline in discretionary IT spending could impact revenue growth by more than 5-10% if macro conditions worsen.