Zensar Technologies Navigates Q3 FY26 with AI-Driven Resilience and Strong Profitability

Zensar Technologies Limited, a prominent player in experience, engineering, and engagement solutions, recently announced its consolidated financial results for the third quarter of fiscal year 2025-2026, ending December 31, 2025. The company reported a revenue of INR 1430.7 crore ($160.5 million), marking a 2.2% year-over-year growth in reported currency and 1.3% in constant currency. While the sequential revenue saw a slight degrowth of 1.4%, Zensar demonstrated robust profitability, with EBITDA reaching 17.4% and PAT at 13.9%. This performance underscores the company's disciplined execution and strategic focus amidst a dynamic market.

Operational Strength and Strategic Shifts

Despite the sequential revenue degrowth, attributed to a mix shift, typical seasonality, and furlough-related softness, Zensar's operational metrics remained strong. The company's gross profit improved significantly to 33.7%, a sequential increase of 270 basis points. EBITDA also saw a healthy rise of 200 basis points quarter-on-quarter. This margin expansion was primarily driven by an improved offshore effort mix, positive forex impact, and better leave utilization, partially offset by furlough impacts and ESOP costs.

Zensar's order book registered a robust sequential growth of 13.6%, reaching $180.2 million. The company also achieved its highest-ever cash position, with net cash and cash equivalents improving to$322.4 million. Days Sales Outstanding (DSO) improved to 71 days, reflecting strong collections. Furthermore, Zensar maintained an industry-leading voluntary attrition rate of 9.5%, marking the fourth consecutive quarter below 10%, highlighting its effective people-first philosophy.

Manish Tandon, CEO and Managing Director, emphasized the company's commitment to becoming a truly AI-native technology services provider. He noted that nearly 60% of Zensar's workforce is now AI certified, and 20% of the current year's order book is AI-influenced. This strategic pivot is supported by significant investments across the entire AI stack, from experience to engineering and engagement.

Sectoral Performance and AI-Driven Wins

From a vertical perspective, Banking and Financial Services (BFSI) demonstrated strong year-over-year growth of 12.2% in reported currency, despite a slight sequential decline of 0.4% in constant currency. Healthcare and Life Sciences (HLS) also grew by 5.2% YoY, though it saw a sequential decline of 2.5% in constant currency, impacted by client consolidation. The Manufacturing and Consumer Services (MCS) segment registered a sequential growth of 3.2% in constant currency, but a YoY decline of 2.7%. The Telecommunication, Media and Technology (TMT) sector continued to face headwinds, with a sequential decline of 8.8% and a YoY decline of 11.6% in reported currency. Management indicated a strategic shift to look beyond TMT's performance, aiming for double-digit growth regardless of its challenges.

Geographically, Europe registered a sequential growth of 1.2% and YoY growth of 6.1% in constant currency, while Africa grew by 2.8% sequentially and 10.7% YoY. The US region experienced a sequential decline of 3.0% and a YoY decline of 0.4% in reported currency.

Zensar's AI initiatives are translating into significant wins. The company developed an Agentic AI solution for a US-based cybersecurity organization, reducing manual effort. They also drove productivity through AI-powered intelligent search for a European motoring association. Notable case studies include an AI-driven Call Centre Transformation for a global satellite service provider, which achieved 100% call coverage and a 150% efficiency improvement, and an Anomaly Detection system for FX Treasury Data for a US-based financial services company, preventing deal errors and reducing identification time.

Outlook and Shareholder Value

Pulkit Bhandari, CFO, reiterated the company's mid-teen margin guidance and emphasized a commitment to maximizing shareholder value through a combination of revenue growth and EBITDA percentage. The Board declared an interim dividend of INR 2.40 per equity share, reflecting improved distribution ratios. Zensar is actively exploring inorganic opportunities, focusing on strategic acquisitions that are accretive to both revenue and the bottom line, rather than merely buying revenues.

Zensar Technologies is strategically positioning itself for future growth by leveraging its AI-native capabilities and disciplined execution. Despite macroeconomic uncertainties and specific sectoral challenges, the company's strong financial foundation, healthy order book, and focus on high-value AI engagements provide a confident path forward. The management's transparent communication regarding challenges and proactive measures to address them reinforces investor trust in Zensar's long-term vision and value creation journey.