Thank you, Alaric. Good morning, everyone.

On behalf of Asian Market Securities, I welcome you all to Zensar Technologies Q1 FY '27 earnings call. We have with us today from the management team Mr.

Manish Tandon, CEO and Managing Director; Mr. Pulkit Bhandari, Chief Financial Officer; and few other members of the senior management team.

Before I hand over the call to Manish, I would like to highlight that the safe harbor statement on the second slide of the earnings presentation is assumed to be read and understood. Over to you, sir.

Thank you.

Thank you, Shraddha. Hello, good morning, good afternoon, and good evening, everyone.

Thank you all for taking the time to join us today to discuss Zensar's financial results for the first quarter of financial year '26-'27. With me on this call are my colleagues Pulkit Bhandari, Chief Financial Officer, and Vijay Simha, Chief Operating Officer.

Let me begin with a brief perspective on the broader environment first. The global macroeconomic backdrop remains uncertain.

Geopolitical volatility, shifting trade dynamics, evolving policy frameworks continue to weigh on business sentiments and investment decisions. Yet, the IT industry has shown remarkable resilience, and beneath that resilience, we see a structural shift.

Clients are moving past technology modernization towards AI-native transformation, reimagining entire operating models to improve service quality, ease complexity, and unlock sustainable productivity gains. This is one of the largest opportunities our industry has seen, and Zensar is well positioned to leverage it.

This quarter marked a significant milestone in our AI journey with the launch of Zen— ZenSai.AgentMesh, a universal enterprise platform for discovering, building, deploying, and governing autonomous AI agents at scale. Building on that foundation, we have moved decisively from strategy to adoption.

We are actively introducing AI-native offerings, expanding partnerships across the AI ecosystem, and investing in AI-certified talent. Together, these strengthen our ability to help clients adopt frontier and sovereign AI innovation, and capture measurable value while upholding the highest standards of governance, security, and enterprise-grade controls.

Turning to our financial performance for this quarter, the company registered a revenue of $159.5 million, representing a sequential quarter-on-quarter growth of 1.1% in constant currency. In INR terms, this equates to year-of- year-over-year growth of 8.9% and a sequential quarter growth of 4%, reflecting continued revenue momentum despite a dynamic demand environment.

Within our vertical portfolios, banking and financial services and insurance vertical remained a strong growth driver, delivering a 8.3% sequential quarter growth in constant currency. This was partially offset by softness in select markets, reflecting the stresses in the broader environment, with revenues declining by 3.8% in healthcare, life sciences, 2.3% in manufacturing, consumer services, and 9.1% in telecom, media, and technology.

Beyond revenue, our operational metrics underscore the strength of our execution. We expanded our workforce by 5.2% sequentially.

Importantly, we increased our $10 million-plus client count by 4 as compared to the same period last year. Our utilization improved to 85.1%, up 80 basis points sequentially, while voluntary attrition remained in an industry-leading low at 9.6%.

Additionally, we were ranked 6th in India's Best Companies to Work For 2026 by Great Place to Work, and which converted into an overall rank of number one in IT services sector category. Together, these metrics reflect our disciplined operational focus, enriching talent culture, and continued progress against our strategic priorities as we position the business for sustainable and long-term growth.

With that, I will now invite Pulkit Bhandari, our Chief Financial Officer, to provide an update on critical financial metrics.

Thank you, Manish. Good day, everyone.

Thank you all for joining this call. I will take you through some of the key business and financial metrics for the quarter ending June '26.

Reported revenue for the first quarter of financial year '27 stood at $159.5 million in USD terms, reflecting a growth of 1.1% sequentially in constant currency terms. In reported terms, sequentially, it grew by 0.7%.

Our EBITDA this quarter contracted by 150 bps sequentially, driven by prestaffing and transition for large deal setup, which is around 2%, increase in other costs, which is around 1.5%, which includes increase in travel, visa, and training costs. This was offset by positive forex inflow impact of 0.8%, reversal of management bonuses of 1.3%.

Our PAT margin for the quarter stood at 12.2%, contracted by 220 220 bps. Some other key financial highlights: order book stood at $149.2 million for the quarter.

Our DSO improved to 75 days. Cash including investments stood at $317.5 million.

ETR for the quarter was 25.3%. Diluted EPS for the quarter stood at ₹8 per share, which is 0.9% growth YoY.

Zensar published its integrated report and BRSR for FY '25-'26. I would urge you to basically go through that.

With that, I will now invite Vijay, our Chief Operating Officer, to comment further on Q1 FY '27 results.

Thank you, Manish and Pulkit. Greetings, everyone.

I will share details about our operational efficacy, service line performance, and AI journey. Our utilization for the quarter stood at 85.1%, which is an improvement of 80 basis points quarter on quarter.

The rigor associated with accelerated fulfillment and capability enrichment picked up a lot of momentum in Q1 of FY '27. We had a gross addition of 1,451 employees in the quarter, which is 50% higher than the previous quarter.

Our voluntary attrition was 9.6%, as Manish just talked about. This is the sixth successive quarter where our voluntary attrition has been below 10%.

The offerings from our service lines and industry services groups continue to resonate well with our clients. The share of revenues from our service lines increased to 72.1% in Q1, which is an improvement of 325 basis points YoY.

On YoY reported currency basis, Data Engineering and Analytics service line grew by 10.8%, Cloud, Infrastructure, and Security Services grew by 5.6%, Products and Platforms, including CMO Services, grew by 1.2%, Enterprise Application Services declined by 3.2%. We continue to deliver significant value to our clients leveraging our pragmatic AI offerings.

Some examples are: we have productionized agent-based software development and testing life cycles across multiple global BFSI clients. With this, we were able to achieve 25%-plus productivity uplift with 44% of the code being AI-generated and 50% to 60% acceleration on large-scale application migrations.

We replatform legacy estates, including mainframe COBOL environments, to modern architectures through repeatable, technology-agnostic agentic workflows, achieving 40% to 60% effort savings. We have scaled the ZenSai platform family across many accounts.

These include ZenSai.qual, which is our quality engineering set of agents, the newly launched Azure AI for agent assurance, AgentMesh that Manish talked about, which comprises of banking and risk assistant agents, and ZenSai.Guidewire, which is the insurance platform delivery acceleration suite. We have won multiple projects leveraging AI-native SDLC, where we are using GHCP, Claude Code, etc., as well as our agentic engineering methodologies, while simultaneously driving outcomes with ZenSai-led managed services.

Our Content Factory suite of agents is being leveraged to run marketing campaigns for many marquee clients. With that, we can now open the line for questions.

Thanks. Two questions, Manish.

First is on BFSI. We saw a sharp 8% growth in this quarter in BFSI, how much of it is to do with the large $210 million deal ramp-up, and ex of that, how has BFSI performed?

Then I'll ask the second one. Yeah.

We started executing this deal in mid-February, the transition and so on is going on, but still there was contribution from this. I don't think we would like to disclose the contribution, but

beyond that, also your second question, even if we had not accounted for the large deal, BFSI still grew.

I think earlier the plan was that this deal would ramp up in a material way in 3Q. Are we running ahead of our initial plans, and the deal has seen some good ramp-up in the first quarter itself?

We

as a company, we try to execute very well, we were anticipating first of all, it's half quarter only, so that is what you need to remember. Second is most of it was transition-related, it is not that we have been able to get all the revenues that we wanted in first quarter, in this quarter itself, but again, it's a process.

I think Q2 and Q3, we will Q2 also I think will continue to ramp up, and the full weight or the revenues of this deal should start appearing in Q3, Q4.

Got it. The other question is, Manish, that many of your larger peers have also called out that they are entering the small and mid-sized enterprises market by carving out a different business unit to focus on this segment.

If you could also talk about the competitive intensity that you've seen in the last few months given the higher focus of larger peers in this SME segment?

See the competitive intensity has continued to increase because the market conditions you are aware, you have seen the results of other companies also. The market conditions, the competitiveness of that has increased.

We are not too worried about the large companies entering into this segment because their operations, their processes, the overall structure is not really designed for SMBs overall. SMBs need different type of execution agility, which is, when your client's number 350 for a large company, there is that limited amount of bandwidth, talent, leadership, management capability that will focus on it.

That is, I think, going to be the primary issue for the larger players.

Right. If last one question I can squeeze in, the fresh order intake at broadly $149 million is at a multi-quarter low number.

How do you look at the pipeline, and what should we expect in terms of TCV win for the remaining quarters of the year?

First of all, $150 million approximately is the number, but the interesting thing in this number is that proportion of new business, which is new business from existing clients and net new, is at an all-time high for us. Q1 usually is a seasonally weak quarter because most of the renewals either happen in Q3 or Q4, depending on when the financial year cycles of our clients are.

We are not unduly worried because as I said the proportion of EN and NN in this is much higher than what we have seen in the past. Shraddha, you should also remember that we were coming out of a bumper quarter last quarter with nearly $430 million or so in order bookings.

I wouldn't be too worried about it.

was from my side, Operator. Yeah.

Hi. Good morning.

Thanks for the opportunity. Nice to see the growth in BFSI beyond the deal.

Just a few questions on how do you think the other verticals which have been sort of declining, which includes MCS, HLS, TMT, do you think that should start moderating, or do you think MCS or HLS should start sort of improving at some point? That's the first one.

The second is that from a deal-win perspective, do you believe that the book-to-bill should start increasing going forward because considering the leak that we are seeing with the other verticals, unless there's a 1.2, 1.3, it becomes slightly difficult. Just wanted your thoughts on how you're thinking about that and how that could sort of change.

Finally, just a question on how should we think about margins from a four-to-six-quarter perspective on a going-forward basis?

All right. First question is commentary on verticals.

Again, what is past is past, but I can tell you that at this moment, I am less bullish about what I am seeing in Europe, and what I am seeing in MCS or Consumer Services. I think Africa, we are doing well.

One-off cases here and there isn't a problem. BFSI, obviously, we are doing very well.

Actually, in TMT, if you leave aside the largest client, we are actually doing quite well there. On SLS, when we started the year, we expected this dip to be much higher because of consolidation, and we have recovered there at least I would say 75% of the drop that we had.

SLS, I think, we will continue to see growth in the subsequent quarters also. That is the overall commentary.

On book-to-bill, see, you have to factor in, I think, the mega deal. Okay?

Last quarter, we had a book-to-bill of whatever, three times or something like that, correct? The overall book-to-bill can be lower in subsequent quarters because there is a mega deal which is where we booked $403 $430 million or whatever total in that quarter.

If you look at that, you have to say that the book-to-bill metrics can be lower without us getting uncomfortable with it. With that said, we would like to maintain our original thinking around 0.9 to 1.1 times of projected revenue.

Does that answer your question,

Mr. Nitin?

That's helpful. My only thought process was the 0.9 to 1 would have been great when we didn't have the leak from the top client and the others.

In that context, wouldn't you want to build on a larger funnel and drive a higher book-to-bill, was where I was coming from. I think the question on margins was the last one.

Yeah. On margins, I'll let Pulkit comment on the margins.

I think the jury is still out there, but I think at least I feel that the slow down in the largest client might be more muted going forward, particularly because there is not too much to go down from here. That perhaps should mitigate your concern.

Pulkit, over to you on the margins.

Sure. Hey, Nitin.

Hi. Nitin, on your question around margins, I think let me basically start with what our priorities are from an investment perspective.

Priority one is, of course, building capabilities, investing in SG&A as and when needed. Third and most important is basically ramp-up of the large deal, yeah.

To that extent, at least for Q2 and Q3, we would expect the margins to be in the similar range as what we are seeing in Q1 because the ramp-up and growth are priority, and eventually, once we have achieved that, margins will follow from Q3 onwards. I would say at least for next one to two quarters, the priority will be around investments in SG&A, capability building on AI, and lastly, ramping up the large deal.

Sure,

that's very helpful, and thanks for all the color. All the very best.

Good morning to the team. I have two questions.

The first question to Mr. Manish is there's a forward-looking guidance on beyond the regular outlook.

What are the top two to three execution priorities you're focusing on in the next two quarters? Alongside that, what do you see as the biggest risk in client demand shifts or competitive pressures, and how are you planning to manage them while strengthening Zensar's position in the IT services and digital space?

That's my first question. I'll ask my second question after this.

Thank you.

Priorities, I think, priority number one is making Zensar an AI-native organization. From a management perspective, a lot of effort, serious execution, bandwidth, etc., is going there, and we don't want to just become AI-native for ourselves.

We want to become AI-native for our clients. That is the priority number one and two.

Priority three is, as Pulkit mentioned, making sure that the mega deal ramp-up goes smoothly, and we continue to invest in that and in our SG&A to get the ball rolling on revenue growth. Did I answer your first question?

Yeah.

Yes. That was a pretty good guidance.

My second question to Mr. Pulkit is again along the similar lines.

From a financial point of view, what key risks or challenges do you anticipate in the coming quarters, and what specific measures are being taken to manage margins, cash flow, and balance sheet strength, especially in areas like currency volatility, receivables, or any compliances? Thank you.

Thank you. That's a very wide question.

I'll try and basically take every point. On margins, as what we stated, right, the priorities and focus on growth, that will drive our margins at least for next couple of quarters will be similar to what you see in Q1.

We are investing, and to that extent, we do not see any large expansion there as of now, yeah. On growth, the priority stays as strong as it was before.

Second, you said how's the balance sheet and any risks there. Our EBITDA to cash conversion is again pretty good.

OCF to EBITDA this quarter was somewhere close to 70 a little more than 70%. Historically, also our cash conversion has been pretty strong.

I would like to believe that it has been higher than the industry average for last 2 years. On anything on receivable side, it's business as usual, no major call-outs.

Our DSO, when we ended FY '26, it was 71 days, which was, if I recall, number two in the industry. When we are closing Q1, it is 75 days, which is again pretty good as a number, and we are okay with that kind of a trajectory.

What we are seeing as a trend is that the payment terms are getting stretched, and to that extent, anything which is between 74 to, say, 79 is an okay number from our angle.

Thank you, and best wishes.

Thank you.

Thanks. Thanks for the opportunity.

Manish sir, just the first question is this is the second quarter in a row where we had a broad-based decline outside BFSI. You explained this to some extent, but just wanted to understand is there a portfolio-specific or competitive risk which is leading to this broad-based decline outside BFSI?

No, I don't think so. Structurally, one of the biggest risks was the client concentration risk that we were carrying, and as I mentioned in my comments, we have actually increased our $10 million-plus accounts by 4.

That is a very healthy sign from reducing client concentration perspective. The environment is such that there will be some ups and downs.

It is to be expected. Sometimes, there'll be a small hiccup here and there.

We are measuring things at a 3-month frequency. I don't try and read too much into it, but continue to focus on building a good portfolio through net new and also by efficient farming.

I don't think there is anything structurally wrong or something that needs working on in the portfolio.

Okay. Just further to what Nitin asked, sir, why the aspiration on book-to-bill being lower as 0.9 to 1.1?

I do agree sporadic large deal will take this number higher, but it continues to remain sporadic. Why I'm asking is this could be a third year in a row where constant currency growth would be low single-digit to mid-single-digit.

To address that, we have to have more feet on the ground, more aggressive in terms of creation of deal pipeline, more aggression in terms of converting pipeline into revenue. What is hampering us to compensate this?

If you notice, our SG&A, particularly our sales costs, have gone up, and we are investing heavily in revamping and adding to our sales force, both. There are lots of delutions happening and will continue to happen where there is non-performance, and the additions will be faster than the delutions, which you are seeing already.

The second thing I would say is the jury is still out there, but the headwind from the large account has reduced a little bit. That is another thing.

Third is, we are not saying that our aspiration is lowered. There is no way we are saying that, but you need to remember that the deal that we are talking about is not a large deal, it's a mega deal.

Okay? The deal size is close to 1/3 of the company's revenues.

To put that in perspective, if it was a tier-one and it was 1/3 the revenues, it will be in the range of $5 to $6 billion. Right?

You have to take that into account. The other way of thinking about it is if you take a book-to-bill of 0.9 to .1 1.1, apply it to 430, right, and you'll get the number that you're looking for.

I wouldn't read too much into it, as I said, on the order booking. As I said, we are focused on revenue growth, and we are focused on revamping our go-to-market to make it more aligned with the AI story that is going on and the consequent changes that we need to do in our sales force to make that newer go-to-market more effective.

Okay. Sir.

Fair enough. Thanks for a detailed explanation.

Just couple of last two questions. Can you give some color in terms of large deal pipeline or mega deal pipeline?

How do you see the growth on a quarter-on-quarter basis in the coming quarters, maybe a qualitative aspect rather than giving a guidance? Just in terms of margins, there has been close to 300 bps decline in gross margins this quarter.

This is more to do with a large deal ramp-up, and once it is ramped up, we can go back to normalized gross margin?

Yes, that is true. The primary thing is decline in the gross margin, and that is primarily because of the mega deal.

On pipeline, if I remember correctly, it's close to 20 3%, I think, of our pipeline is large deal. There are no mega deals, just to be clear.

Large deal definition is about anything greater than $25 million in TCV. That is where things stand from a pipeline perspective.

I think pipeline is good. On prognosis for the rest of the year, see, things are changing so rapidly in this new AI world that it is difficult to give a long-term or three-four quarters prognosis, but from where I stand, I think Q2 will be better than Q1 is all I can say.

Thanks for the opportunity. My first question is on the Healthcare and Life Sciences vertical, as we have seen in previous commentary said that apart from BFSI, this vertical was the one where we have invested, and we are seeing last three quarters it has been declining.

How much of this decline you attribute to the macros versus the portfolio issues, or are there any client-specific issues here?

Mostly portfolio issues and client-specific issues. We're too small to really worry about macros, actually.

The slowdown in FDA decision-making and some adverse FDA decisions did not help our clients because our focus is on biotech quite a lot. Some of those adverse decisions for our clients did not help us.

I would say Healthcare, Life Sciences, the primary issues have been consolidation in one or two clients where we have been consolidated out.

Okay. In terms of the headcount addition that we had in this quarter, in terms of gross also, how much of that is related to the large deal, and in terms of the rebadging exercise and the headcount addition, is it all in the base, or we can see some more addition there?

I would request Vijay to answer that question. I don't know whether we can answer that question or not or we are allowed to answer that question or not, but anyway, over to you, Vijay.

I think without getting into too much specifics of how much was it, large deal was obviously a fairly significant component of the headcount addition, but I'm happy to note that outside of large deal also, there were quite a bit of additions as compared to the previous quarter. It has been largely aided by the large deal, but good additions elsewhere as well.

Okay. Sir, the last question, we have a healthy cash on the balance sheet, what are the plans to deploy that, whether to fill some gaps in the portfolio, some geographical expansion or entering into new areas?

What's the plan? I think

we are actively looking at scaled assets. We are not looking at tuck-in acquisitions.

We are looking at scaled assets in the north of $200 million range of revenues or maybe 150 at least. I believe that this is the right time, at least the pricing is not absurd on some of these assets.

I believe that it is the right time to look at some of these assets seriously, and we are looking at two or three assets even as we speak.

Okay. Sir.

Thank you and all the best.

Thanks.

Sir. Just one question.

Of the total pipeline, you mentioned 23% is the component which relates to the large deal. Can you give a same number one quarter back and four quarter back?

For example, the mega deal that we did was when we had put it in, it was 1/3 the size in the system. Okay.

I know where you're going with this, Sandeep, but look at it as a qualitative answer rather than a quantitative one, and I would say that the large deal composition as a percentage of our overall pipeline has been pretty much in this 20% to 30% range.

Okay. Thanks.

Thanks and all the best.

Thanks, Sandeep.

Right. Thank you, everyone, for joining this call.

I want to reiterate my gratitude to our clients for their continued trust, to all Zensarians for their unwavering dedication, and, of course, to all of you and our shareholders for their confidence and support. In summary, while the demand environment remains mixed, our revenue growth, broad-based volume growth, and robust cash position collectively reinforces our confidence in the path we have chosen.

As we move into Q2, our priorities remain clear: maintain the growth momentum, disciplined execution, and deepen the value we deliver to clients, and continue advancing our AI-native capabilities. Thank you once again for taking the time to join Zensar's quarterly earnings call.

Those of you in India, have a good day. In other geographies, have a good evening.