Revenue of the Pune-based software services firm rose 1.1% over the previous quarter to Rs 1,240.8 crore in the three months ended Sept. 30, according to an exchange filing on Tuesday. That compares with the Rs 1,249.97-crore consensus estimate of analysts tracked by Bloomberg.
Zensar Q2 Results: Key Highlights (QoQ)
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Revenue up 1.1% at Rs 1,240.8 crore (Estimate: Rs 1,249.97 crore).
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EBIT up 3.46% at Rs 194.3 crore (Estimate: Rs 156.16 crore).
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Margin up 35 basis points at 15.65% (Estimate: 12.49%).
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Net profit up 11.33% at Rs 173.9 crore (Estimate: Rs 130.53 crore).
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Net cash of $227.1 million as on Sept. 30.
Zensar’s dollar revenue rose 0.6% sequentially to $150.2 million in the second quarter. In constant currency terms, it was up 0.2%. The performance was supported by sequential growth in the company’s Europe (11.3%) and South Africa (9.1%) business, even as U.S. revenue slumped 4.3% from the previous quarter.
India’s $245-billion-plus IT services industry is bracing for a slowdown, if not a total washout, in the fiscal ending March 2024 as enterprises in the U.S. and beyond cut back on technology to cope with high interest rates and inflation. Some of India’s largest IT firms—Infosys Ltd. and HCL Technologies Ltd.—have pared their growth expectations for the rest of FY24, underscoring the pain they are under.
“While we saw some slowdown in certain areas of business, we also experienced good momentum in a few of our geographies and verticals,” Manish Tandon, chief executive at Zensar Technologies, said in a statement. “Our core service lines are resonating well and are helping clients to achieve competitive differentiation.”
In terms of business verticals,
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Banking and financial services reported a sequential revenue growth of 3.1% in constant currency terms.
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Manufacturing and consumer services reported a sequential revenue growth of 6.7% in constant currency terms.
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Hitech reported a sequential revenue decline of 8% in constant currency terms.
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Healthcare and life sciences shrank 1.5% sequentially in constant currency terms.
Separately, Zensar handed out salary hikes across the company on July 1—something its larger peers have deferred by a quarter or so. That hasn’t had a material impact on the operational profitability, Chief Financial Officer Sachin Zute said.
“(We have) maintained the margin in mid-teens because of multiple margin improvement levers and disciplined budgetary control across the organisation,” he said. “As we step into the second half of the fiscal, we have a healthy order book. We continue to stay focused on execution, innovation and cost optimisation to maintain Zensar’s financial performance seen in the past few quarters.”
On Tuesday, shares of Zensar Technologies rose 0.67% to Rs 549.70 apiece on the BSE even as the benchmark Sensex ended the day 0.39% higher at 66,428.09 points. The quarterly results were declared after market hours.
