Zensar Technologies Navigates Q2 FY26 with AI-Led Growth and Resilient Margins

Zensar Technologies, a prominent player in experience, engineering, and engagement solutions, has reported its consolidated financial results for the second quarter ended September 30, 2025 (Q2 FY26). The company delivered a steady performance, with revenues reaching $162.8 million (approximately 1,421.3 crore INR). This represents a 4.2% year-on-year (YoY) growth in reported currency and a sequential quarter-on-quarter (QoQ) growth of 0.5%. Despite a dynamic market environment, Zensar demonstrated strong operational discipline and a strategic focus on AI-driven innovation, which underpinned its profitability.

Segment-wise, Zensar showcased mixed performance. The Banking and Financial Services (BFSI) segment reported a robust sequential QoQ revenue growth of 5.6% and an impressive quarterly YoY growth of 11.0%. Similarly, Healthcare and Life Sciences (HLS) saw a sequential QoQ revenue growth of 3.9% and a YoY growth of 11.3%. Manufacturing and Consumer Services (MCS) maintained stability with a sequential QoQ growth of 0.1% and a quarterly YoY growth of 0.1%. However, the Telecommunication, Media, and Technology (TMT) sector continued to face headwinds, reporting a sequential QoQ revenue decline of 9.9% and a quarterly YoY decline of 6.7%. Management attributed this to a secular trend where clients in the TMT space are rationalizing operational expenditure (OpEx) to fund capital expenditure (CapEx) in areas like GPUs and data centers. Geographically, Europe and Africa regions demonstrated strong sequential QoQ growth of 5.2% and 6.9% respectively, while the US region experienced a sequential QoQ decline of 1.9%.

Operational Excellence and AI-Led Transformation

Zensar's commitment to operational excellence was evident in its Q2 FY26 performance. The company successfully absorbed the impact of annual salary increments across geographies without compromising its margins. Gross margins improved to 31.0%, a sequential growth of 50 basis points (bps) QoQ, while EBITDA stood at 15.4%, a sequential growth of 20 bps QoQ. This was supported by improved utilization, which rose by 50 bps to 84.8%, and a favorable shore mix. The company's voluntary attrition rate remained stable at 9.8%, marking the third consecutive quarter below 10%, reflecting strong employee retention.

A significant highlight of the quarter was the launch of ZenseAI, Zensar's next-generation agentic AI platform. This platform is designed to elevate the company's core value proposition of Experience, Engineering, and Engagement. Management emphasized that ZenseAI is gaining traction with clients, with 28% of the quarter's order bookings being AI-influenced. This indicates a strong demand for AI-infused solutions and Zensar's capability in delivering them. The company has also made substantial investments in upskilling its workforce, with over 5,000 employees deepening their skills in AI, Generative AI, and Agentic AI, creating a strong pool of strategic consultants for AI-first transformations.

Strategic Wins and Future Outlook

Zensar secured several strategic wins in Q2 FY26, demonstrating its expertise in AI-led solutions. These included legacy modernization in Treasury & Risk through Gen AI integration for a global FinTech company, an AI-powered defect detection system for a US-based commercial manufacturer, and a WhatsApp-integrated Gen AI chatbot for a major player in the global aviation IT industry. These projects highlight Zensar's ability to deliver measurable impact and drive innovation for its clients.

Despite the challenging macroeconomic environment and specific headwinds in the TMT sector, Zensar's management expressed confidence in its strategy. The company's pipeline remains strong, including a robust large deal pipeline, which management believes will convert in the coming quarters. The focus remains on client-centricity, adapting to global shifts, and leading with AI. While not providing explicit forward guidance, management reiterated its commitment to maintaining mid-teen margins and judiciously investing for growth. The company's improved CRISIL ESG score of 71, placing it in the 'Leadership' category, further underscores its commitment to sustainable practices.

Zensar Technologies concluded Q2 FY26 with a theme of disciplined execution and strategic clarity. The company's ability to maintain profitability, manage attrition, and drive AI-led innovation positions it well to navigate future market dynamics and continue its growth trajectory. The management's focus on delivering differentiated value through innovation and operational discipline reinforces investor confidence in its long-term vision.